Virgin Health Clubs Tone up for Global Status
Virgin Active has emerged from the recession in good health and now is planning to put on some serious extra muscle and turn itself into the strongest player in the health and fitness world. The company, in which Sir Richard Branson’s Virgin Group has a 76 per cent stake, will today report underlying earnings of more than £100 million for the first time.
The group, which has clubs in Britain, Italy, Spain, Portugal and South Africa, reported 2009 revenues up 15 per cent to £391 million, Earnings before interest, tax, depreciation and amortisation (ebitda) were up 18 per cent to £101.1 million. It opened eight new clubs during the year, taking its estate to 187 and pushing up its total number of members by 4 per cent to 919,000. Like-for-like revenues grew by more than 10 per cent and the ebitda margin ticked up by a point to 26 per cent. Net debt fell to about £170 million.
Half of the group’s revenues came from Britain, where it has 71 clubs after its takeover of Holmes Place in 2006. However, with the group seeking sites in only two cities — Bristol and Guildford — its expansionary focus is firmly overseas, particularly in Italy and South Africa. In Italy, where it has 17 clubs, Chief Executive Matthew Bucknall said Virgin Active had “an incredible opportunity to become the dominant player”, with the scope to overtake the UK in size of operation. It plans to open up to 20 clubs there over the next five years, mainly in mixed-use retail developments.
In South Africa, where it has 91 clubs, the chain is still benefiting from close links between Sir Richard and Nelson Mandela. It is about to launch a new concept aimed at the fast-growing middle classes and it is developing a club at a mall in Soweto. “It may be in Soweto, but that shopping centre would not look out of place in Milton Keynes,” Mr Bucknall said.
He said that the group’s organic expansion of eight to ten clubs a year would be funded from its internal resources, although he has not ruled out acquisitions as a means of entering new markets such as America.
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