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Curves Holdings (7085 JP)

Spin-off & COVID-19 recovery combo at 10x normalized EV/EBIT
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Curves Holdings (7085 JP - US$407 million) is a Japanese fitness chain that dominates the niche of serving elderly women. It was part of karaoke bar operator Koshidaka before being spun off in 2020. It has about 2,000 locations in Japan, most of which are franchisees that pay royalties to Curves.

Curves Fitness was invented by Americans Gary and Diane Heavin of Waco, Texas in 1992. In the early 2000s, Koshidaka executive Takeshi Masumoto travelled to the United States, was impressed by the fitness chain, and wanted to bring the concept to Japan.

In the following 20 years, he built a Japan franchisee operation for Curves. In 2018, eventually acquired the global franchisor that controls most markets outside of the United States and Oceania. And finally, Koshidaka spun off Curves in 2020, hoping it would flourish as a stand-alone entity.

Unfortunately, this was right before Japan entered a COVID-19 lockdown that decimated the demand for fitness services. The number of club memberships fell from 822,000 to just 600,000.

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