By DANIEL TAUB
Go to any one of the 430 Gold's Gym locations worldwide, and you'll find yourself surrounded by stern-faced men and women sweating away while lifting barbells, pumping away on stationary bikes and doing sit-ups.
Are these the same types who would spritz their muscles with a $25-a-bottle body mist that has "a fresh, cool mint bergamot top balanced with a clean lime and lemon sparkle, a light green floral middle, and a mild mushroom base"?
Venice-based Gold's Gym Enterprises Inc. is betting they are.
Next month, stores in Gold's Gym locations, as well as various department and specialty stores, will begin selling a new line of bath and beauty products featuring the Gold's Gym logo.
The products are being manufactured and sold by Port Washington, N.Y.-based RJS Inc. under a licensing deal with Gold's Gym. The deal is the latest of a dozen or so such agreements Gold's Gym has entered into, putting its logo on everything from Visa cards to barbells to vitamins to children's clothing.
Gold's already has cut a licensing deal for a sports bra, and is looking into a sports drink, training videos and muscle-rub ointments.
The 33-year-old company, which first gained notoriety in the 1975 film "Pumping Iron" starring Arnold Schwarzenegger, is betting that its appeal extends far beyond the bodybuilder's world.
"More people have worn our T-shirts than have worked out in our gyms," said Ed Connors, chief financial officer of Gold's and a 25 percent owner of the company. "I think what they're doing is associating themselves with a healthy lifestyle. They're saying, 'I don't smoke, I don't drink too much, I don't do drugs.' "
While product licensing has been the faster-growing part of Gold's Gym Enterprises, the company is aggressively pumping up its franchise gym business.
Unlike Bally Total Fitness Centers Corp. and 24 Hour Fitness, Gold's does not own its gyms (with the exception of its flagship in Venice). It licenses the name to privately owned gyms around the world. Operators pay between $12,000 and $25,000 for the right to use the Gold's name for the first year, and then between $6,000 and $25,000 for each additional year.
Today, there are about 450 Gold's franchises in the United States and 54 overseas, up from 400 U.S. and 30 foreign locations three years ago, said Paul Grymkowski, president and international director of Gold's Gym Franchising Inc., Gold's Gym's sister company.
"Our primary development was, of course, in the U.S.," Grymkowski said. "In the last 18 to 20 months, the interest in the international market has more than quadrupled. The percentage of inquiries coming from outside the United States 18 months ago was about 10 percent. Now it's 60 percent."
Privately held Gold's Gym does not disclose financial results, but Connors said about 40 percent of its revenues come from product licensing deals, with the other 60 percent come from its gym franchises and the Venice operation.
Its product licensing revenues are about evenly split between gym equipment and clothing, with the other products generating relatively small amounts.
Gold's Gym's appetite for expansion has reached such heights that the company is considering a merger with one of its larger franchisees and then taking the merged company public.
"We're exploring that," Connors said. "We've had a number of meetings. There is consolidation occurring in the health-club industry, and it could be beneficial to our growth.
"What we would have to do is join forces with some of our larger gym operators, some of our larger franchisees join forces and go public. And that's what we're looking at," he said, adding that there is no timeline for a possible initial public offering.
The growth of Gold's locations worldwide not only helps the franchising arm, but spreads the name internationally leading to increased retail sales.
Angel Banos Jr., president of Musclebound Inc., which owns the 8-year-old franchise in Hollywood, said Gold's merchandise in his fitness center accounts for about 30 percent of his company's revenues. About 25 percent of those sales are to people who do not belong to the gym.
"We get busloads of Japanese tourists who stop over, jump out of the bus, and grab T-shirts, jackets and hats to take back home," Banos said. "It's sort of like a Planet Hollywood or a Hard Rock Cafe. It's the same principle."
But will that translate to the bath and beauty market?
"There are a lot of ladies that are interested in the line," said Mandy Ginis, director of product development and marketing for RJS. "And I think men are really starting to pay attention to good grooming and skin care. And the body mist is not pretty. It has a clean and fresh citrusy musk. It's not like a guy would be embarrassed to wear it."
Along with the body mist, RJS is licensed to manufacture a hair-and-body wash made with chamomile and rosemary extracts; a body spray made with vitamins A and E; and a body scrub made with sea salt and soybean, avocado, macadamia nut, apricot, peppermint, spearmint and rosemary oils.
David Rose, senior vice president of equity research for Jefferies & Co. Inc., said that while the target audience may not be gym-goers, these products likely will find success simply because they will have a name consumers recognize.
"It's a great name," he said. "People will buy almost anything with a name they recognize on a product. But my perception is that the target audience could be a little bit different than the club member."
As for the future beyond beauty products, Gold's Gym's Connors believes there is plenty of room for growth in the apparel business a business Gold's Gym will delve further into this fall when it introduces its sports bra, V-neck crop tops, bike shorts and boot-cut pants. "It seems to me soft goods (apparel) should be a higher number than hard goods (gym equipment)," he said.
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