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Logan-based iFIT Health & Fitness has followed deep staff cuts announced Friday with a shake-up of its leadership, including the departure of longtime CEO Scott Watterson.
Watterson, an iFIT co-founder who has worked 45 years with the exercise equipment maker, will remain in his role as chairman of the board of directors, the firm said Monday, but is stepping away from day-to-day management.
The company’s chief financial officer, Steve Barr, and Mark Watterson, chief experience officer, will serve as co-presidents. The news comes after iFIT laid off an undisclosed number of employees last week at its Cache County headquarters and operations worldwide in what one source said was a cost-cutting move essential to “safeguard the business long term.”
“I am proud of what we have built at iFIT over four decades and our ability to successfully adapt in a rapidly evolving health and fitness landscape,” Scott Watterson said Monday in a statement.
The announcement is also timed with the unveiling of a $355 million infusion of private investment into iFIT, led by Connecticut-based L Catterton, a prominent equity firm focused on consumer brands.
That new cash signals the settlement, company officials said, of a $300 million lawsuit against iFIT by one of its shareholders, hedge fund Pamplona Capital Management.
The firm, which is facing escalating costs, said in its statement it had “amicably resolved” the outstanding litigation.
The company offers popular brands such as NordicTrack and ProForm, powered by an interconnected health and fitness platform with experiential content and interactive hardware. It said Monday it has over 7.3 million subscribers across more than 120 countries and was seeing increasing member participation in workouts and events.
Archrival Peloton and other makers of exercise equipment, including personalized interactive content, saw a dramatic spike in demand for their products during the coronavirus pandemic as millions shifted to home workouts.
The 66-year-old Watterson, who reportedly will work on development of next-generation products for the company, said Monday he would be investing in iFIT alongside Catterton, which is expected to play a major role in leading the company forward.
“Today’s important updates,” Watterson said, “strongly focus the business for continued growth in what has made us successful in the first place: technology, innovation and the member experience.”
Monday’s moves are the latest fallout from iFIT’s indefinite delay of an initial public offering in October that the company abruptly withdrew, citing “adverse market conditions.” That stock sale was set to bring huge windfalls to several company executives — including a top leader of The Church of Jesus Christ of Latter-day Saints and another high-ranking authority who had recently stepped down from his church position.
Apostle Gary E. Stevenson, as co-founder of one of the iFIT’s early predecessors, stood to gain as much as $911.9 million for nearly 43.4 million iFIT shares he accumulated through the years. Robert C. Gay, now an emeritus general authority Seventy in the church, was to see his nearly 18 million shares in iFIT lifted to roughly $385.9 million in value.
Shares owned by former CEO Watterson, who launched the firm with longtime friend Stevenson in 1977, stood to be worth a total of $4.6 billion post-IPO. The business magazine Forbes estimated Watterson’s wealth in February at $2.1 billion.
In his statement, Watterson said he was “excited to transition my executive responsibilities to Mark and Steve,” whom he said were “well-suited to continue iFIT’s long history of success.”
Sources close to the company said last week iFIT needed the latest capital infusion as it worked through persistent supply problems involving many key components, including steel, resins and microchips essential to its line of immersive workout machines.
In a joint statement Monday, co-presidents Barr and Mark Watterson said, with the latest restructuring, iFIT “is on strong financial footing and stands ready to capture the enormous opportunity ahead of us.”
They said their future focus for iFIT was centered on “steamlining” the business as well as “investing in and enhancing the member experience and continuing to innovate across interactive software, content and hardware.”
Marc Magliacano, a managing partner with L Catterton, said the company would play “a meaningful role” in advancing iFIT’s future and that with the new capital raised, “we believe the best of iFIT is yet to come.”
L Catterton led a $200 million investment in iFIT in October 2020, joining Pamplona Capital Management after it lent the firm $200 million in 2019.
In an internal email addressed Monday to all global employees, Barr and Watterson said L Catterton’s part in the company would be “close and impactful.”
The focus, they said, would be “product innovation, experiential content, and areas of the business that are delivering the most value for our more than 7.3 million members.”