A business selling and renting fitness equipment for gyms and personal use has been placed in administration, despite the fitness industry booming in recent years.
Fitness Choice, which operates online and in-store, was placed in administration on November 7, 2013, with Nicholas Giasoumi and Shane Deane from Dye and Co appointed as administrators.
Deane told SmartCompany the level of debt the company has is yet to be determined, however, it did have cash flow difficulties.
“Hopefully those days are behind it, we’re still trading as normal,” Deane says.
“We’ll be putting together a reporters to affairs (a statement of the assets and debts of the company) in the next couple of days, and then we’ll be able to get our head around the level of debt.”
Currently, the business has seven employees and no job losses are expected.
The business has 28 creditors and has been operating under its current structure since 2005.
Fitness Choice sells, rents and leases a variety of equipment such as treadmills, step machines, and spin bikes.
Over the past five years the online sporting and physical recreation goods sector has grown by 10% per annum, according to an IBISWorld report from February this year.
The sector was predicted to generate $765 million in revenue and grow by 6.3% annually between 2013 and 2018.
The growth of the industry has been driven by the increasing popularity of online shopping, in conjunction with the push to fight rising obesity rates by encouraging regular exercise.
But Deane says despite the industry boom, he wasn’t surprised by the collapse.
“Businesses get into trouble for all sorts of reasons, regardless of their industry,” he says.
“While there can be trends in industries, it’s not reflective of every business. Each business has its own structure and differing levels of debt.”
Deane says a few years ago there were a number of gyms which went into administration, but this is the first fitness business he’s seen facing financial difficulty for a while.
“We still haven’t gotten to the bottom of it in terms of what’s caused the debt… but the business seems strong enough to continue to trade and we hope we can see it out the other side.”
The first creditors’ meeting is due to be held on November 18.