Soho House is trying to push back on its critics

Since going public almost two years ago, membership club chain Soho House has suffered a sharp share price decline, economic turmoil and a short seller who declared its shares worthless.

But the company’s CEO, Andrew Carnie, insists it is on the right track – even as major shareholders consider taking the company private again.

“There is no going back,” Mr. Carnie said in an interview. “We have been quite consistent in delivering results over the last 12 months.”

The company posted its latest quarterly financial results on Friday, reporting that it lost $118 million last year, compared to a loss of $220.6 million in 2022. Using the pro forma earnings measure known as adjusted EBITDA, which excludes certain costs, it doubled its profits. to $128 million.

The results follow a change in strategy since the company’s initial public offering in July 2021.

At the time, the company was still dealing with pandemic-related restrictions and said it was focusing on new offerings such as digital memberships in countries without clubs, as well as its emerging co-working business.

Soho House now believes its core business of high-end private clubs in major cities is sufficient to deliver the robust growth the stock markets demand and maintain its cool reputation.

Soho House has continued to grow. Over the past year, it has opened locations in Mexico City; Portland, Oregon; and other cities. It operates 43 homes and has a member waiting list of more than 100,000 people.

In Friday’s results, Soho House reported increases in income from both membership fees and spending in the houses.

But the company’s shares are down nearly 60 percent from the original offering price. Developer partners have been hit by the decline of commercial real estate and an increase in labor costs. And in November, the company blamed its disappointing quarterly results on bad weather and the temporary closure of its Tel Aviv facility.

Friday’s earnings announcement will be closely watched in light of a report last month by the short seller Glasshouse Research which mocked the company for having a “broken business model and terrible accounting” and compared it to WeWork. Short sellers profit from declines in a company’s stock price.

“The report is quite false and inaccurate,” Mr Carnie said. “The way it was written, it was meant to make headlines.” (Soho House’s share price fell after the report’s publication, but has largely recovered.)

The bigger question is what Soho House’s largest shareholders, including billionaire Ron Burkle, have in mind for the company. In its rebuttal to the Glasshouse report, Soho House revealed that there was a special committee of its board weigh potential transactionsincluding taking the company private.

Mr Carnie declined to comment on these deliberations but said he would like to continue running Soho House as a publicly traded company.

“There are no regrets,” he said. “I am very pleased with our progress over the past twelve months.”