Q&A
COLIN WAGGETT
The CEO of Fitness First speaks to Pete Hayman about the challenges in the global marketplace and the company’s flotation plans
How would you describe current global trading conditions? We have a very substantial range of trading conditions, from pretty favourable to quite challenging. Overall, it’s probably more challenging than it was two years ago, but in some parts of the world – such as Asia and Australia – conditions are pretty fair. Some parts of Europe, however, are quite tough. The main issue is the consumer economy. The recession
hit a lot harder in Europe and, as a result, more multi-site operators took a more aggressive stance on pricing and competing in order to acquire members.
Are you expecting conditions to improve during the remainder of this year, and into the next? Overall I think things will get better, but there are some regions – the UK, for example – where I don’t expect things to change very much for some time.
In the UK, is there anything the new government can do to re-invigorate growth? It’s a question of seeing what it can do to sort the economy out. The government has a tough challenge, balancing tax rises and spending cuts. There’s little point asking it for any particular support for our sector when there are other sectors much worse hit, and when it has no money.
Looking at your annual results ending 31 October 2009, revenues increased but profits were down. What were the reasons for this? It depends on what you are looking at, as we grew revenue and EBITDA. If you’re looking at operating profit, those figures are after a number of non-cash charges, such as impairment charges with certain clubs in Europe and one-off interest charges. At the operating level, our profits grew; at the reported level, impairment and one-off charges meant the profits went down.
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General consensus suggests that profits can be better driven by retaining members rather than continually recruiting new ones. To what extent to you agree? What matters most is net membership growth and net revenue growth. However, there’s much more of an upside in our business from improving retention than from recruitment. Our retention rate for customers has improved substantially; our sales disciplines and skills have been established for some time and therefore are into refinement mode.
The space allocation at Fitness First clubs is gradually changing, says Waggett
Read Health Club Management online at
healthclubmanagement.co.uk/digital november/december 2010 © cybertrek 2010
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