Virgin Active is coining it in SA
South Africa’s biggest chain of health clubs, Virgin Active, reported a marginal (1%) decline in membership over the past year, impacted by the tougher consumer environment and one off health scheme provider changes.
JSE-listed holding company, Brait, agreed to acquire up to an 80% interest in the international health club operator Active Topco (Virgin Active) for about £682 million (R12.17 billion) in 2015.
Richard Branson’s Virgin Group retained the remaining stake in Virgin Active.
On Tuesday, Brait SE, part-owned by South African billionaire Christo Wiese, reported its financial results for the year ended March 2017.
The company said that in Southern Africa, Revenue and EBITDA, measured in constant currency, increased by 7% and 5% respectively over the past year.
The company offloaded 36 non-core UK clubs in July 2016, 35 of which were sold to Nuffield Health, while 14 racquet clubs were sold to David Lloyd Leisure, which completed on 31 May 2017.
“These two transactions represent the final significant step for the UK operations to focus on metropolitan and commuter hubs in key markets at the premium end, which is in accordance with Virgin Active’s international strategy,” Brait said.
Following the sale, Virgin Active operates 46 clubs in the UK, 33 of which are in London. It also has clubs in Europe, in Italy, and in Asia Pacific, in Singapore and Bangkok.
On a continuing operations basis, 16 clubs were opened during the year, giving a total of 241 clubs at the end of December 2016. 13 of these club openings were in South Africa.
According to the Economist, South Africa has the world’s highest fitness club revenue – $931 million (R12 billion), with Virgin taking the lion’s share.
The chain reportedly accounts for between 60%-70% of the total market, with 138 clubs in South Africa. The country’s second largest chain, Planet Fitness has 25 gyms, Zone Fitness has 23 clubs, while several relatively new players include Viva Gym (7 clubs), and Go Health, owned by Grindrod Bank, launched in SA in 2015 and has opened five branches in Joburg, one in Durban, and one in Cape Town.
Due to a decline in the number of gyms abroad, Virgin has seen its membership decline to one million, from 1.3 million over the past several year. It is understood that more than half a million members reside in SA.
Ross Faragher-Thomas, MD of Virgin Active SA, told Talk 702 in January that while he could not confirm the Economist’s figures, the gym industry is thriving in SA, “it’s grown enormously over the last decade”.
Brait said on Tuesday that Virgin Active carries a value of R15.5 billion.
Chief operations officer for Gym Company Ian Hepburn told City Press earlier in the year that an independent study showed that Virgin Active controlled approximately 70% of the local gym market.
“When you multiply that 70% by an average of R500 monthly premium charges, it would make sense that the South African gym industry brings in those billions in revenue every year. But this is just an assumption.”
Rates at Virgin differ greatly, from R199 per month to in excess of R1,250 per month.
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