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Fitness startup WeFit files for bankruptcy

12:01 | 12/05/2020

Onaclover Jsc, the owner and developer of Hanoi-based fitness app WeFit, announced its bankruptcy and termination of services in a Monday email to customers due to financial struggle linked to the Covid-19 pandemic.  

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fitness startup wefit files for bankruptcy
(Photo: Cafeland)

Accordingly, the mobile app’s official name is WeWow, but is still commonly referred to as WeFit, the original name.

The company said it had exhausted its operating capital due to a financial crunch earlier this year and the subsequent Covid-19 pandemic.

It filed for bankruptcy on April 29 and informed its creditors and shareholders to contact the Hanoi People’s Court for legal matters regarding their rights and benefits.

Some gym owners said they have not received payment from the company of up to hundreds of millions of dong (VND100 million = $4,270).

Customers, for their part, said they were confused and did not know if they could still continue access gym sessions that they had paid for. Pham Thi Van Anh, a customer, was surprised to learn that the company is shutting down because she still has 15 unused sessions worth VND1.5 million ($64).

Onaclover has not announced specific plans to deal with these issues. It said more information on measures to ensure the best solution for customers’ benefits will be released later.

WeFit, an app that connects users with fitness centers and beauty salons in Hanoi and Ho Chi Minh City, was created in 2016 by founder and CEO Nguyen Khoi, who in 2018 became a Forbes 30 Under 30 honoree.

Last year, WeFit announced that it had received $1 million from CyberAgent Capital and other investors, VNE reported.

Since the end of last year, gym and spa owners have been reporting unpaid dues from the company and earlier this year, CEO Nguyen Khoi was replaced by deputy CEO Nguyen Hai Dang. Some said that the move aimed to reform the business.

Last week, the Indonesian budget hotel firm Airy said it would permanently cease operations by the end of the month. Food logistics startup Stoqo has also recently announced its shutdown, according to Tech In Asia.

The bankruptcy news also makes headlines in several Asia news outlets, including Tech In Asia and Deal Street Asia.

fitness startup wefit files for bankruptcy
(Photo: Captured)

In its article titled “Vietnamese fitness startup WeFit files for bankruptcy”, Tech In Asia writes WeWow, a Vietnamese lifestyle platform that offers a ClassPass-like service called WeFit, has filed for bankruptcy as it runs out of cash amid the Covid-19 pandemic”.

fitness startup wefit files for bankruptcy
(Photo: Captured)

Meanwhile, Deal Street Asia says WeFit announced its bankruptcy and termination of all services to its customers on May 11, saying the coronavirus crisis “has exhausted all of the company’s operating capital.”

Sports facilities, including gyms, were put under suspension across Vietnam since the latter half of March, one week before the social distancing restriction order issued in the country. Numbers of gymnasiums had earlier already reported low influx of gym-goers.

Gymnasiums and other sports facilities, in general, were gradually given the green light to resume business towards the end of April and early May, thanks to the relaxed social distancing order. However, each establishment must strictly follow preventive measures.

Sports facilities, including gyms, as well as spas, beauty salons were put under suspension across Vietnam since the latter half of March, one week before the social distancing restriction order issued in the country. Numbers of gymnasiums had earlier already reported low influx of gym-goers, which adversely affect their income.

Gymnasiums and other sports facilities, in general, were gradually given the green light to resume business towards the end of April and early May, thanks to the relaxed social distancing order. Each establishment, however, must strictly follow preventive measures.

Vietnam Fitness Club Market's outlook prior to COVID-19

According to Ken Research, Vietnam fitness club market is expected to reach over US $3.5 billion by the year ending 2023.

In future, it is anticipated that the revenue share of organized gym centers will reach to 18.5% by the year ending 2023.

Penetration rate of fitness services in Vietnam is expected to increase in future and will reach up to 7.7% by the year end 2023.

Shift in choice of people towards total body endurance exercise from hardcore gym training is acting as major catalyst for growth in Vietnam fitness services market. Major companies such as Citigym, MMA Gym Fitness Centre will be expanding its number of fitness outlets leading to growth in the market.

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Jasmine Le