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AP Business Case Study · Unit 3, Task 10

Gymshark: From a Sewing Machine to a £1 Billion Brand

🛠️ Skill Builder
Unit 3 · Culminating Event — Startup Finance Summit

A real-company case study for Unit 3, Task 10 of AP Business with Personal Finance, written in the same format as the course's business cases. Read the case, answer each question on your own, then open the sample answers to check your thinking. Facts are current as of October 2026, and every source is listed at the bottom.

The Case

Unit & taskUnit 3, Task 10: Culminating Event — Startup Finance Summit
Topics3.1–3.9
Key peopleBen Francis (Co-founder and CEO); Lewis Morgan (Co-founder); Steve Hewitt (CEO hired in early 2015)
Case years2012–2026 · Evaluation case
Key questionHow did Gymshark’s founders keep startup costs low, choose their funding, and grow sales—and what do its recent income statements show about the difference between growing revenue and growing profit?
Business Canvas componentsFinance, Operations, Customer
Snapshot
  • Business: Gymshark (fitness clothing and accessories)
  • Industry: Sportswear and activewear retail
  • Founded: 2012 in Birmingham, England, by Ben Francis and Lewis Morgan
  • Headquarters: Solihull, England
  • Key people: Ben Francis, founder and CEO
  • Ownership: Private; General Atlantic bought a 21% stake in 2020

A Pizza Driver With a Plan

In 2012, Ben Francis was a 19-year-old student at Aston University in Birmingham, England, earning less than £5 an hour as a Pizza Hut delivery driver. With his friend Lewis Morgan, he started a fitness business called Gymshark in his parents’ garage in Birmingham.

The founders had very little money, so they kept their startup costs low. At first they wanted to sell bodybuilding supplements, but a supplement maker’s minimum order was far more than Francis could afford. Instead, for several months Gymshark drop-shipped: it sold other suppliers’ supplements through its website, so it never had to buy inventory up front. Next, because the founders could not find workout clothes that made sense to them, they spent everything they had on a sewing machine and a screen printer. For about a year, they printed and sewed Gymshark clothing by hand.

Betting Everything on One Show

After visiting Bodypower, a fitness expo held at Birmingham’s NEC convention center, Francis decided that Gymshark had to exhibit there the following year. Booking the stand cost everything the young company had. At the show, Gymshark launched its first tracksuit, the Luxe, and Francis recalls that its stand was the busiest at the event. Back at a unit in Droitwich, his brother Joe—Gymshark’s first employee—kept shipping orders. When Francis switched the website’s stock back on after the show, orders poured in so fast that he had to set every product to zero. Within half an hour, it had sold more than in its whole history up to that point.

Gymshark built its brand on social media. Its core customers were fitness-focused 18- to 25-year-olds. It staged influencer-led events it called world tours to bring fans together, filmed them for online video diaries, and benefited from the huge amount of content its fans created themselves. By 2020, it had more than 12 million social media followers.

Fast Growth, Real Profits

As the business grew, the founders brought in experienced leadership, hiring Steve Hewitt as CEO in early 2015. Records at Companies House, the U.K.’s official public register of companies, show that in 2016 Francis and Morgan each held between 25% and 50% of Gymshark’s shares. The company grew while staying profitable. Its profits rose from £1.1 million in 2016 to £18.6 million in the year ended July 2019, when sales reached about £176 million. That growth put Gymshark at No. 1 on the Sunday Times list of British private companies with the fastest-growing profits. About half of its revenue came from America.

Selling a Slice for More Than £1 Billion

In August 2020, Gymshark announced that General Atlantic, a U.S. private equity firm, had bought a 21% stake in a deal that valued Gymshark at more than £1 billion. The price General Atlantic paid was not disclosed. Alongside the deal, Francis increased his own stake to more than 70%, and a General Atlantic executive joined Gymshark’s board. The partnership was meant to support international growth, especially in North America, which was already Gymshark’s largest customer base. At the time, Gymshark’s latest yearly revenue was more than £250 million.

Bigger Sales, Thinner Profits

Exhibit 1 shows what happened next. In the year ended July 2021, revenue jumped 54% to £401.9 million, and pre-tax profit reached £45.4 million. Revenue kept rising every year after that, but pre-tax profit fell. For the year ended July 2023, the company said that rising costs for raw materials and labor, along with cost-of-living pressures that reduced shoppers’ spending, hurt results. Its gross profit margin slipped from 65% to 60% as it worked through extra inventory, and administrative costs rose from £160.5 million to £192.9 million.

Even after the General Atlantic deal, Gymshark remained mainly a direct-to-consumer, international business. In FY2023, £536.4 million of its £556.2 million in revenue came through its direct-to-consumer channel, compared with £11.9 million from its own stores. The United States was its largest market, with £250.4 million in sales, compared with £111.7 million in the U.K.

Gymshark also moved into physical stores, opening its first permanent store on London’s Regent Street in 2022 and later adding stores in places such as New York, Dubai, Amsterdam, and Manchester. In April 2025, with profit still shrinking, the company said about 296 jobs—almost a third of its workforce—were at risk, while it planned to create 168 new roles. Francis, who by 2022 was again leading the company as CEO, said Gymshark was increasing its focus on controlling spending.

In March 2026, Gymshark said revenue for the year ended July 2025 had risen to £646 million, its 13th straight year of growth, while pre-tax profit fell to about £7 million. Like other U.K. companies, Gymshark files its annual accounts with Companies House, where anyone can read them.

Exhibit 1: Gymshark revenue and pre-tax profit, fiscal years 2020–2025 (British pounds)
Fiscal year (ends July 31)Revenue (£ millions)Pre-tax profit (£ millions)
FY2020260.730.4
FY2021401.945.4
FY2022484.427.8
FY2023556.213
FY2024607.311.8
FY2025646about 7

Sources: FY2020–FY2024 from Gymshark’s annual accounts filed at Companies House, as reported by City AM (May 2022, February 2024, April 2025); FY2025 figures released by the company in March 2026, as reported by TheIndustry.fashion. Pre-tax profit is profit before tax. Figures are in British pounds (£); no dollar conversion is given.

Reading Questions

These are the same for every case. They check that you caught the basics before you analyze.

1. Which business does this case feature, and what product or service does it provide?
The case features Gymshark, a British fitness brand founded in 2012 that designs and sells workout clothing and accessories. It began by drop-shipping supplements through its website and then made its own clothing, starting with hand-printed and hand-sewn products. By 2026, it sold online and through its own stores in cities such as London, New York, Dubai, Amsterdam, and Manchester.
2. Who are the key people named in the case, and what roles do they play? Which other stakeholders — individuals or groups — have an interest in the business?
Ben Francis co-founded Gymshark at 19 and later became CEO; Lewis Morgan co-founded it with him; Steve Hewitt was hired as CEO in early 2015; and Francis’s brother Joe was the first employee. General Atlantic, a U.S. private equity firm, became an investor with a 21% stake and a board seat in 2020. Other stakeholders include customers (especially 18- to 25-year-olds focused on fitness), the athletes and influencers who promote the brand, employees (including the roughly 296 whose jobs were at risk in 2025), suppliers, and the public, who can read Gymshark’s accounts at Companies House.
3. Identify an opportunity and/or a challenge the business faces in this case.
Opportunity: strong demand from a social-media fitness community allowed Gymshark to grow revenue from £260.7 million in FY2020 to £646 million in FY2025, with North America as its largest customer base. Challenge: costs grew faster than sales—raw material and labor costs rose and administrative costs increased—so pre-tax profit fell from £45.4 million in FY2021 to about £7 million in FY2025, and the company put about 296 jobs at risk in 2025.

Practice Questions

These apply the Unit 3 concepts from Task 10 to the case, in the style of AP free-response prompts.

1. Identify two startup costs that Gymshark’s founders paid, and describe the source of financial capital they used to cover them. Then describe one benefit and one risk of that funding choice.Topics 3.4–3.5 · LO 3.4.A, 3.5.B
Two startup costs were a sewing machine and a screen printer—one-time equipment expenditures the founders needed before they could make their own clothing. They also avoided a big startup cost—an initial inventory of supplements—by drop-shipping, so they did not have to meet a supplier’s large minimum order. They paid with their own money, spending everything they had, which is bootstrapping; they later paid for an early marketing expense, a stand at the Bodypower expo, the same way. One benefit was that they kept ownership and control instead of selling shares to outside investors (Companies House records show that in 2016 Francis and Morgan each held more than 25% but no more than 50% of the shares), and they owed no interest or loan payments. One risk was that their personal money was on the line: if the business or the Bodypower stand had not paid off, they could have lost everything they had put in, with no outside funds to fall back on.
2. In August 2020, General Atlantic bought a 21% stake in a deal that valued Gymshark at more than £1 billion. (a) Calculate the minimum value of General Atlantic’s stake implied by that valuation. (b) Describe one potential benefit and one potential risk for General Atlantic as an equity investor rather than a lender.Topic 3.5 · LO 3.5.C
(a) 21% × £1,000,000,000 = 0.21 × £1,000,000,000 = £210,000,000, so the stake was worth at least about £210 million at the deal’s valuation (the actual price paid was not disclosed). (b) Benefit: as a part owner, General Atlantic shares in Gymshark’s future success—it can earn a capital gain if the company’s value rises (revenue grew from more than £250 million in 2020 to £646 million in FY2025) and possibly dividends, and it gained a board seat to influence strategy. Risk: unlike a lender, it has no promise of interest or repayment. If the business becomes less valuable, the stake loses value; pre-tax profit fell from £45.4 million in FY2021 to about £7 million in FY2025, which could lower what investors are willing to pay for the company.
3. Using Exhibit 1, calculate (a) the percent change in Gymshark’s revenue from FY2021 to FY2024 and (b) pre-tax profit as a percentage of revenue (pre-tax profit ÷ revenue) for FY2021 and FY2024. Then explain how rising costs could cause profit to fall even while revenue grows.Topic 3.6 · LO 3.6.B
(a) Percent change in revenue = (£607.3m − £401.9m) ÷ £401.9m × 100 = £205.4m ÷ £401.9m × 100 ≈ 51.1%. (b) FY2021: £45.4m ÷ £401.9m × 100 ≈ 11.3%; FY2024: £11.8m ÷ £607.3m × 100 ≈ 1.9%. Revenue grew by about half, but each pound of revenue produced far less profit. The case shows why: rising raw material and labor costs increased the cost of making Gymshark’s products, and clearing out extra inventory pushed the gross profit margin down from 65% to 60% in FY2023, so gross profit grew more slowly than sales. At the same time, operating expenses such as administrative costs rose from £160.5 million to £192.9 million. When costs grow faster than revenue, gross profit and operating profit get squeezed, so pre-tax profit falls even in a record sales year—and in 2025 the company put about 296 jobs at risk and said it would focus more on controlling spending.

Discussion Questions

Talk these through with a partner or your class. There's more than one good answer, so back yours up with evidence from the case.

  1. Francis and Morgan spent everything they had on equipment and then on a single trade-show stand. Was that a smart risk? What evidence would you want before making a bet like that with your own money?
  2. By 2020, Gymshark was already profitable. Why might a profitable, fast-growing company still sell part of itself to an investor instead of borrowing from a bank? What did Gymshark gain, and what did it give up?
  3. Gymshark’s revenue rose every year from FY2020 to FY2025, but its pre-tax profit fell after FY2021. If you were Gymshark’s finance manager, would you focus first on raising prices, lowering the cost of making products, cutting operating expenses, or selling more units? Defend your choice.
  4. Gymshark is a private company, but anyone can read its accounts at Companies House. Which stakeholders would read them, and what would each group look for?
  5. Which factor was most important to Gymshark’s early growth? (a) Keeping startup costs low through drop-shipping and bootstrapping; (b) the launch at the Bodypower expo; (c) its social-media community of athletes, influencers, and fans; (d) General Atlantic’s 2020 investment. Defend your choice with evidence from the case.

Application Activity

Act as the finance manager for your own Business Canvas business. List three one-time startup costs and two initial expenses, and identify one way to lower your startup costs the way Gymshark did with drop-shipping. Then choose a funding source (bootstrapping, a loan, or equity), write a three-sentence pitch that states your funding request and how the money will be used, and describe one risk your lender or investor would face.

Key Takeaways

  • Startup costs can be kept low with creative choices. Gymshark avoided buying inventory by drop-shipping and paid for a sewing machine, screen printer, and trade-show stand with the founders’ own money, which let them keep ownership but put their personal savings at risk.
  • Equity financing trades ownership for capital without required repayment. General Atlantic’s 21% stake valued Gymshark at more than £1 billion and supported international growth; as an investor, General Atlantic accepted the risk that the stake could lose value in exchange for a share of future gains.
  • Revenue growth does not guarantee profit growth. Gymshark’s revenue rose about 51% from FY2021 to FY2024, but pre-tax profit fell from £45.4 million to £11.8 million as costs rose faster than sales, so managers turned to cost control. Honest, public financial reporting lets investors, employees, and lenders see these trends.

Use it in your Business Canvas Project

Like Gymshark’s founders, look for ways to cut startup costs before asking anyone for money, and be ready to explain who carries the risk of your funding choice. In your Startup Finance Summit pitch, show not just how revenue will grow but how you will keep costs from growing faster than sales, so your projected margins stay healthy.

For Teachers

Opening activity: Ask students: If you wanted to start a clothing brand with almost no money, what would you have to buy first, and what could you avoid buying? List their ideas on the board and sort them into one-time costs and ongoing costs. Tell them they will compare their list with how two young founders in England actually started a brand that later was valued at more than £1 billion.

Tip: “Print case” prints the case and all questions with the sample answers hidden, so it works as a student handout.

Sources

  1. Gymshark Secures Investment from General Atlantic Valuing Company at Over £1 Billion, General Atlantic (press release), 2020-08-14
  2. How I Started the UK’s Fastest Growing Company, Ben Francis (founder’s website), 2020
  3. About Us, Gymshark, 2026-10-16
  4. GYMSHARK LTD (company number 08130873): overview, filing history, and persons with significant control, Companies House (UK government), 2026-10-16
  5. Gymshark achieve fittest profits in Britain, Greater Birmingham Chambers of Commerce, 2020-04-27
  6. A better way to build a brand: The community flywheel, McKinsey & Company, 2022-09-28
  7. Gymshark nets £45m profit as founder Ben Francis climbs up Sunday Times Rich List, City AM, 2022-05-22
  8. Gymshark: Profits continue to fall despite surge in sales, City AM, 2024-02-22
  9. Gymshark puts 300 jobs at risk despite record sales, City AM, 2025-04-30
  10. Gymshark reports record year of sales growth for FY25, TheIndustry.fashion, 2026-03-12
All Case Studies Review Unit 3 Practice Questions

This case was written for educational use from the public sources listed above. Gymshark did not review it and is not affiliated with this site; company names are trademarks of their owners. This resource is independent and not affiliated with or endorsed by College Board.