Virgin Active has lost 227Â 000 active members in South Africa since prior to the Covid-19 pandemic, equating to 31% of its base.
The 31% decline in active members remains a better performance than its clubs in Italy, where the decline has been 35%. In UK, active members are down by 29%, while in its Asia Pacific markets (a far smaller base), the decline has been 39%.
The number of active members across the group has dropped by 32%, from 1.134 million to 775Â 000.
Total members, including those on freeze, is down 28%. This is a large decline from the levels seen towards the end of last year. At that stage it had lost ‘only’ 100 000 members globally.
But owner Brait says sales performance in South Africa has been “strong†since Level 3 lockdown restrictions were lifted in April.
This saw active members drop from 512Â 000 in August to 501Â 000 in September.
It says sales in September and October are “broadly in line with 2019 levels†but that terminations had increased following the ending of the freeze option. It says 5% of members remain on freeze which is “in line with expectationsâ€.
It says there has been a “steady improvement in member engagementâ€.
Worryingly, terminations in the UK have been higher than expected with “some members†coming off freeze and then cancelling their gym contracts.
Club usage
Club usage in CBDs including London, Sydney and Melbourne remains “subduedâ€. It has not disclosed any detail on its South African clubs, but some located in office nodes are noticeably underutilised.
Brait values the total Virgin Active business at £468.5 million (close to R1 billion), substantially below the level in March 2018 of £1.3 billion. Brait’s stake (80%) is valued at £393 million or R7.97 billion.
Virgin Active has net third party debt of £456 million and Brait’s borrowing is stretched to the limit as it has funded various shareholder facilities to help Virgin Active (and to a lesser extent New Look) restructure and navigate the pandemic.
It has committed a further R760 million as part of shareholder funding for Virgin Active South Africa to restructure and extend that business’s existing debt facilities.-moneyweb
