04/04/2017 - 14:16

Muscleworx bulks up on private equity

04/04/2017 - 14:16

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Perth retail chain Muscleworx is poised for national expansion after buying its major competitor and securing backing from private equity investor Banksia Capital.

Muscleworx bulks up on private equity
Yehuda Cohen (left) with Adam and Chris Williams. Photo: Philip Gostelow

Perth retail chain Muscle Worx is poised for national expansion after buying its major competitor and securing backing from private equity investor Banksia Capital.

Founded by brothers Chris and Adam Williams in 2011, Muscleworx has grown rapidly to have a network of 30 stores and more than 100 staff in a sector they believe is ripe for consolidation.

The business specialises in sports nutrition, which covers product categories such as protein powders, fat burners and vitamin supplements.

Chief operating officer Adam Williams said the industry had become more mainstream in the past five to six years.

“We’re not just catering to body builders, it is general sports nutrition, athletes, sporting teams, cyclists, mums and dads,” he said.

“Our clientele is very diverse – people like us, just trying to look after their personal health.”

Mr Williams said he discovered the potential when he started selling proteins as a sideline to his work as a personal trainer.

“We discovered quickly there was good demand, so we decided to put together some of our savings and give it a bash.”

The Williams opened 14 stores before securing bank funding in 2015 to buy Supplement Mart, which was their single largest competitor.

That doubled the size of the business overnight and meant the brothers spent the better part of a year focused on integration.

“That was massively challenging, initially,” said Chris, who is chief executive.

One of the challenges was ensuring they retained the right people, who appreciated the Muscleworx culture, particularly the level of service offered by staff.

“They are happy to sit with a customer and talk for 30 or 40 minutes about their diet and exercise plan and supplements,” Chris said.

Another challenge was upgrading the back-end systems to support the growth of the business.

“That was probably our weakest area and it’s been our biggest investment,” Chris said.

“The back end, in terms of our financials and day-to-day reporting, that’s where we were lacking, and we’ve come along a lot in the past six to eight months.”

Banksia Capital director Yehuda Cohen said his group, which acquired a large minority shareholding last year, brought in skills that complemented the owners.

“Chris and Adam know all about branding, marketing, customer service, supplements,” Mr Cohen told Business News.

“We come in and try to help with the sophistication around financials, stock management, getting that right, and giving them capital so they can grow off that base.

“This a problem for all SMEs. If they grow too fast and their systems aren’t right, they lose track of cash flow, they lose track of stock management.”

Banksia has invested in a wide variety of businesses, including Cool Clear Water, Skill Hire and Croissant Express, and typically invests between $3 million and $10 million.

Mr Cohen said Banksia’s investment would give Muscleworx capacity to pursue both organic growth and acquisitions.

The group is aiming to be a national market leader, with aspirations to have more than 100 stores.

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