In just over three months as president and chief executive officer, Joe Magnacca has taken a hands-on approach at Massage Envy.
The former embattled ceo of Radio Shack is reaching back to his experience as the president of daily living products and solutions at Walgreens, to map out a future for the franchised leader in massage and skin-care services. Company sales are on the rise, hitting about $1.4 billion including franchise revenues and expanding in the 6 percent yearly range.
That growth has primarily been accomplished by opening more stores, but Magnacca sees fertile territory with global growth, expanding services, adding products and attracting more men.
“Born in 2002, this company found this amazing white space and pioneered affordable wellness and created a membership model [clients join as members much like a health club],” said Magnacca in an interview with WWD. Massage Envy consists of 1,143 all franchised units in 49 states with 1.6 million client members.
Magnacca believes there is an opportunity to reach 2,000 units domestically along with global potential.
This week, Massage Envy took its first steps to international expansion with the announcement of a site in Sydney, Australia. Slated to open May 17, the location will be the first of a 100-unit, 15-year deal between Massage Envy and Australia-based Collective Wellness Group, which will manage Australian operations. A second location will open about a week later. Other markets earmarked for growth include Canada, the U.K. and New Zealand, where services are often covered by health care and the population puts wellness at a premium.
Beyond “stamping out” more locations, Massage Envy is broadening its offer. “We are not just massage, not just skin care. We are total body care and we want to leverage our model and take it to the next level. We think there is much more we can do inside the box,” Magnacca explained.
Facials were introduced in 2006 in conjunction with Dr. Murad. Most recently, Massage Envy has tested and added more types of facials. Back facials, currently in testing, are among the new concepts. The company personalizes its massages and skin care to client needs. A sports injury dictates a different approach than a stressed-out mom. The company will make investments in technology to stay current with trends, he said.
To convey that massages and facials aren’t only a luxury, the company embarked on new branding last year with commercials that show daily life issues — a center seat on an airplane, overexertion on the dance floor at a wedding — can be relieved from a trip to Massage Envy. Accordingly, the company also tweaked its logo to focus on its initials — M.E. “We promote the idea that we help you take care of you,” Magnacca said.
Retail product expansion is a natural for Magnacca with his drugstore background. He also strengthened what he called an already dynamic c-suite team with Beth Stiller, whom he brought on from Walgreens to serve as chief commercial officer.
“Eventually product will be a driver for our business,” he predicted. But expansion into retail will be curated and controlled. “The key to develop the retail product side is tying that back to services whenever possible. You’ll see the work we are doing is linked to products that can be taken home.” Massage Envy is Dr. Murad’s largest customer and Magnacca said product expansion will be “complementary,” and not duplicate existing ranges. “We can highly curate our assortment,” he said adding the company can take cues from its 25,000 therapists and aestheticians.
The professionals can also open up opportunity for Massage Envy to sell skin-care devices, as well as make qualified product recommendations. “We think devices are going to change the world when it comes to skin care, but they take an assisted sale,” he said.
Men are on the wish list said Magnacca, noting that 75 percent of members are currently women, but “guests” who visit before joining are 50/50 male versus female. “We have a huge opportunity with men,” he said.
Massage Envy is in an enviable position with Millennials, who have grown up with health and wellness as part of their lifestyles. “Kids of today are into preventative health and maintenance,” Magnacca noted. “We are well-positioned for the new consumer.”
Most Massage Envy locales, which feature eight to 18 treatment rooms, are in destination strip shopping centers, but Magnacca doesn’t rule out sites in businesses and major malls where there are many vacancies, perhaps with a smaller footprint.
He also likes leveraging the synergies with Massage Envy owner Roark Capital Partners, the private-equity group that bought the company in 2012. Roark’s portfolio includes Anytime Fitness and Orange Theory fitness. “It makes sense you can work out and then get a massage,” he said. “There’s connectivity across the brands.”
Massage Envy’s market leadership — perhaps because of the franchise network — has kept it under the radar. “We are one of the best-kept secrets,” said Magnacca, promising that is about to change.