The gym chain, which came close to administration three years ago, said its move upmarket was starting to deliver results
Fitness First, the gym chain that came perilously close to administration in 2012, has hailed signs that its turnaround is starting to take hold after enjoying growth in the UK for the first time in five years.
The company is now more than halfway through a three-year plan to revamp its sites as it moves upmarket to head-off stiff competition from fast-growing discount rivals such as Pure Gym and The Gym Group.
The re-branding programme is beginning to pay off, Fitness First said on Monday, with earnings before interest, taxes, depreciation and amortisation in the UK up 1pc to £8.6m in the 12 months to the end of October, the first growth since 2009. Its operations in Asia enjoyed a stronger performance, with like-for-like EBITDA up 10.5pc on an 11pc increase in revenues.
“We’ve worked hard to stabilise the business and create a platform for growth going forward,” said boss Andy Cosslet, who took the reins in 2012. “We reached the turning point during the latter part of 2014 as the impact of better results from a growing number of rebranded clubs started to be felt.”
Fitness First, which has 377 sites around the world, said it had “re-engineered” 122 clubs by the end of 2014 and that it aimed to finish refurbishing the estate this year. Revenues at the revamped UK sites grew 4pc in the year to March and EBITDA was up 16pc. There are also plans to grow in Asia, with 30 clubs slated to open in India in the next five years and six earmarked for Hong Kong in the next two.
The group is two years into a three-year turnaround programme that will see £200m invested in the business. Oaktree Capital Management took a majority stake in the gym chain in 2012 via a debt for equity swap, after the group underwent a company voluntary arrangement.
Overall group results for last year showed the going remained tough for Fitness First. Adjusted operating profits almost halved to £14.9m from £29.4min 2013, and revenues dipped to £509.3m from £511.1m. Its membership fell to 873,000 from 916,000.