Posted June 14, 2016 4:11 pm by

Virgin Active eyes revamp after selling off one-third of its clubs

Virgin Active plans an ambitious overhaul of its gyms after agreeing to sell more than a third of its UK clubs to Nuffield Health for about £80m.

The international fitness chain – which is controlled by South African billionaire Christo Wiese following a £1.3bn deal last year – is offloading 35 clubs, including staff and members, to not-for-profit group Nuffield, taking its UK estate down to 61 sites. Paul Woolf, Virgin Active’s chief executive, said the business planned to recycle the sale proceeds into investing in its UK and European operations.

Virgin Active did not disclose the price the clubs fetched, but it is thought they were sold for about £80m.

“This is a really good opportunity for both of us,” Mr Woolf said. “From our side, over the course of the last few years we’ve been really focusing our business and this is an acceleration of that strategy.”

In the UK, Virgin Active is revamping its estate, which is focused in large towns and cities, around three concepts: a “Collection” group of luxury clubs, large family-orientated sites, and racquet clubs. It has 11 Collection sites in the UK, mainly in and around London, but through upgrades and new openings now aims to have more than 20 in 18 months’ time. The top-end clubs offer services such as gym kit laundries and spas.

Mr Woolf said the company, which had 276 clubs in 10 countries around the world at the end of 2015, is also eyeing expansion in Europe, particularly in Italy.

It recently bought three clubs in Milan, taking its total in the city to 11, and is eyeing further growth in Rome and Naples as well as in Africa and the Asia Pacific region, where it recently unveiled a £150m investment programme for as many as 40 new sites. Virgin Active expects to open 19 clubs in total this year.

Brait, the investment vehicle of Mr Wiese, took an 80pc stake in Virgin Active last year and the remaining 20pc is held by Virgin founder Sir Richard Branson. Brait’s annual results today showed revenues at Virgin Active rose 3pc to £630.5m and underlying adjusted profits were up 15pc to £133.5m. Membership was up 3pc to 1.5 million people.