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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.
That said, Curves is still outperforming the industry. It’s been taking market share from traditional full-service gyms like Renaissance and Central Sports. And women universally love the service, with Google Review scores consistently above 4.5/5.0. The churn is minimal at just 2.4%. I’ve been investing in Japan for a long time, and I’ve never seen customers as enthusiastic about a service as they are about Curves.
Part of the attraction is how safe women feel at Curves’ gyms. The company targets elderly women who are not good at exercising but want to stay in shape as they age. They feel supported by friendly instructions that help them with diet advice, a feeling of community, and more. The fact that men are not allowed into the gyms also helps them feel safe.
It’s also well-established that spun-off entities tend to outperform the average company. It signals shareholder orientation and better aligns interests between management and minority shareholders. Takeshi Masumoto is a talented individual, and I’m hopeful he’ll perform better on his own than under the weight of the larger Koshidaka organization.
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