june 14, 2016 issue n°9 cmg and silhouette at …...reassured that it was reporting ample growth...

FITNESS NEWS Europe 1

CMG and Silhouette takeover finalisedL

FPI Group, a French-based asset management firm, has taken over the major-ity of CMG Sports Club in

France and Silhouette Fitness in Switzerland, with a plan to support the development of the two entities.

21Centrale Partners (21CP), a French-Italian investment com-

pany, started holding talks last year to sell its stake of about 85% in the former Club Med Gym, which it acquired in 2008. Three years later 21CP bought a majority stake in Silhouette,

with support from Swiss Equity Capital Partners.

After a substantial clean-up and rebranding, CMG Sports Club started opening clubs again and currently runs a net-work of 23 service-oriented clubs in and near Paris, with a strong emphasis on group classes. CMG Sports Club re-ported sales of €52 million for the full year until October 2015 with 64,000 members.

LFPI is very familiar with the French gym group since it pro-vided mezzanine financing for CMG Sports Club and has been represented on its supervisory board since 2008.

Franck Hédin, CMG Sports Club’s chief executive, says that the buyer intends to work with current managers on a two-pronged strategy for the Paris market leader.

Jatomi pulls out of Turkey

Jatomi Fitness Group faced angry members in the last days, after it decided to cease its Turkish business

and to file for the bankruptcy of its consistently loss-making operations in the country.

A Turkish businessman in-volved in the fitness equip-ment market has declared his interest in taking over assets of the Jatomi group in Turkey, but the Polish-based group said that its Turkish business is to be liquidated, with pro-ceeds used to repay as much debt as possible.

“Jatomi Fitness Group took the unfortunate decision to cease operations within Tur-key due to heavy financial losses since opening its first Is-

tanbul club,” said Trevor Bren-nan, chief executive officer at Jatomi, at the start of June.

Jatomi later added that it had suffered a loss of about €18.7 million in earnings before in-terest and tax (EBIT) for the four years from 2012 until 2015 and that it was forecast-ing another operating loss of more than €3.5 million for this year. The group emphasised that the loss was funded en-tirely by shareholders.

The Polish-based company said that the clubs had about 25,000 members but that they were unsustainable due to the “highly expensive and uneco-nomical leases entered into by the previous management team.”

TechnogymQ1 2016 (€ 000, %)

Q1 2016 Change

Sales 115,574 + 11.2%

Italy 10,875 +12.8%

Europe (excl. Italy)

62,022 +14.5%

North America 10,484 +19.9%

Asia Pacific 15,758 -5.6%

Latin America 5,852 +58.7%

MEIA (*) 10,583 -3.8%

NEW! You’re reading the ninth issue of Fitness News Europe, the independent business news publication for executives in the international fitness industry. With an online portal and a bi-monthly newsletter, Fitness News Europe provides reliable business news and often exclusive analysis on the fast-moving fitness market. Turn to the last page for further information about the publication, to register for a free trial and obtain your subscription at a special launch rate.

CONTENTS New owners for CMG Sports Club and Silhouette ......p1-6Jatomi out of Turkey .....p1-6Basic-Fit shares at lower end of price range .........p1-5Planet Fitness in Italian distribution tie-up ...........p2Netpulse raises $13 m .... p4Italian club owners want special status ................. p4Nuffield Health buys 35 Virgin gyms ......................p5DiR launches franchises ..p7Anytime starts in Italy ....p7

Other newsAdidas (p4), Lenovo (p2), Lululemon (p2), Les Mills (p3), Polar (p3), Pure Gym (p3), Rimini Wellness (p4), Skechers (p2), TomTom (p3) Under Armour (p3)

Continued on page 6....

June 14, 2016Issue N°9

Fitness News Europe is published by Zelus (France)

[email protected]: Barbara Smit

[email protected]@ All rights reserved.

The information published in this newsletter cannot be copied or distributed electronically without the publisher’s written permission.

Pure, Paris Bastille/ CMG Sports Club

Basic-Fit shares were priced at the lower end of the range set for the Dutch low-cost fitness

chain when they started trad-ing on the Euronext stock ex-change in Amsterdam on June 10, implying a market capital-ization of €820 million.

While the indicative price range was set at €15 to €20, shares debuted under the BFIT symbol at €15 million, suggesting an enterprise value of €994 million. With nearly 26.7 million exist-ing shares and newly-issued shares, the initial public offer-ing (IPO) amounted to about €400 million.

René Moos, Basic-Fit’s co-founder and chief executive, turned up to hit the gong at the stock exchange in Amster-dam in the early afternoon (the usual opening slot was taken up for a bigger flota-tion) but BFIT shares ended their first trading day with a decline of 3.3%. They contin-ued to slide early this week, below €13.5 at the time of writing.

Basic-Fit has turned into the largest operator in Eu-rope in number of clubs, with 351 gyms and 1,076,752 members in five countries at the end of March. The Dutch group generated sales of €202.2 million and adjusted EBITDA of €60.1 million last year, but debt weighed heav-ily on the company’s results.

“The listing process has been an exciting journey and we are pleased with the re-sponse of both institutional and retail investors to Ba-sic-Fit,” Moos said in a state-ment last Friday.

BFIT shares at lower end of price range



2 FITNESS NEWS Europe

Top Gear

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Planet Fitness in France has agreed to take over 60% of Transatlantic Fit-ness Italia, the distribution partner for TRX and several other brands,

allowing it to sell a wide range of fitness equipment and programs in Italy.

The deal forms Planet Fitness Italia, which regroups Transatlantic Fitness Ita-lia and six sales people of Les Mills Italia - an entity in Milan owned by Les Mills Euromed, which has the same owner as Planet Fitness in France.

Along with TRX, Transatlantic Fitness Italia sold Rock Tape kinesiology tape and Dynamax medicine balls. Based north of Bologna and led by Stefano Ermacora, it was previously controlled by Transatlantic Fitness in Germany. Under the agreed take-over, Planet Fitness says the German group retains 10% in the Italian company, with the remaining 30% for the management.

Prior to the agreement, Planet Fitness obtained Italian rights for some of the brands that it sells in France. Trigger Point,

Disq, ViPR and Reebok fitness equipment were added to the offering of Transatlan-tic Fitness Italia.

Planet Fitness Italia appeared with the full assortment on a busy stand at Rimini Wellness, which marked the start of the partnership for the Italian market.

Along with all the above brands, Planet Fitness Italia also started selling HBX (Hu-man Body Exercise) programs in Italy,

with small group classes held at Rimini Wellness. HBX consists of five functional training classes with boxing and wrestling themes, among others.

“It makes sense to be able to offer a full assortment of products to the gyms and personal trainers,” said Bruno Gayraud, deputy chief executive at Planet Fitness. TRX and other brands sold by Transatlan-tic Fitness Italia should particularly bene-fit from the added sales force in Italy.

Shortly after Rimini Wellness, Planet Fitness inaugurated its sprawling campus in Aix-en-Provence last Friday. Hundreds of guests assembled at the new campus, which includes the head office of Les Mills Euromed, a Les Mills immersive studio and plenty of other facilities on 3,300 square metres.

Aix was particularly busy last week since the third Fitness Challenges con-gress was held there on June 9-10. The or-ganisers boasted that it was attended by most of the leading players in France.

Planet Fitness and Transatlantic tie-up in Italy

Soft Briefsn Skechers made a statement at the Rimini Wellness fair with a stand of 4,500 square meters that occupied an entire hall, as part of its investments into the training category. While Skechers has long been recognised as a sportswear brand, it has been putting more emphasis on sports performance in the last three years, with technical ranges for running and several other sports. Daniel Levy, global vice president in charge of the Skechers performance division, suggested that the range launched to retailers for 2017 would be more strongly targeting the training and fitness markets. Among the products most suitable for this purpose is the latest version of the Go Run 4, which was picked as the editor’s choice by Runner’s World in its June issue. The magazine explained that Skechers had decided not to switch to the Go Run 5 because it only slightly tweaked the previous version of the Go Run 4, but they thought the changes brought just the right balance of comfort, light weight and response. The huge Skechers stand in Rimini featured a store as well as a stage and a running track. The Skechers performance ranges have found strong resonance in international markets, enabling Skechers to report earlier this year that its foreign wholesale turnover had surpassed sales to U.S. retailers for the first time in the first quarter of this year. Its European business could further be-nefit from the completed expansion of its European distribution centre this year.

n Lululemon’s management has come under attack from its founder and largest shareholder, Chip Wilson, who has aired his disappointment with the Canadian yoga apparel brand’s performance in a contribu-tion to the Globe and Mail. He wrote that, since Lululemon’s current chief executive has been in place, the value of Under Armour has increased by 79% and Nike by 45%, while Lululemon’s share price dipped by 8%. “This appears to indicate that investors do not believe Lululemon can grow and earn like its competitors,” Wilson claimed. However, the criticism came just before Lululemon upgraded its forecast for the full year, after a 17% increase in sales to $495.5 million for the quarter until the end of April. With store openings and growing online sales, the rise amounted to a hike of 19% in constant cur-rencies, above Lululemon’s own estimates. The Vancouver-based group’s shares were up on the day, with investors apparently reassured that it was reporting ample growth and that inventories have improved. Lu-lulemon’s gross profit margin dipped by 0.3 percentage points to 48.3% and income from operations dwindled by 15% to $57.6 million. That amounted to an operating margin of 11.6%, down from 16.1% for the same quarter in 2015. Lululemon’s latest guidance calls for sales to end up in the range of $2.305 billion to $2.345 billion for the full fiscal year, compared with previous guidance of $2.285 billion to $2.335 billion.

n Yet another technology giant is making its way into the smart footwear space, as Lenovo brought a prototype of connected sneakers to the Tech World conference in San Francisco last week. While the Chinese technology firm has yet to provide all the details about the product, it appears that it provides all the pre-dictable functions, such as tracking distance covered and the equivalent calorie consump-tion, but no heart rate monitor. The Verge reports that Lenovo sneakers run on an Intel wearable chip and that they charge wirelessly when placed on a shoe-sized charging panel. The prototype was apparently made with a customizable insole and a Vibram outsole. LEDs are embedded in the soles, so that they light up along the bottom. But perhaps most intriguingly, there’s a gaming functionality built into the product: Wearers can use their feet as a controller to step back and forth, move left and right, jump and perform various other actions in a mobile game. The concept may tie in well with the gamification trend in the fitness industry. But as The Verge points out, it should take some time before Lenovo’s latest smart shoes hit the market. Other com-panies that have been working on such smart shoes include Under Armour, which unveiled its own version at the Consumer Electronics Show in Las Vegas in January. Another entrant is Altra Footwear, the running footwear com-pany that was acquired at a majority in 2011 by Icon Health & Fitness, the big American fitness equipment supplier.

Soft BriefsSoft Briefs


Fitness Tech

Netpulse, the American company that specia-lises in fitness apps for fitness clubs, has raised

$13 million in a round of fund-ing led by August Capital to pursue its global expansion.

Netpulse, which focuses on larger operators, currently works most intensely with American chains such as Planet Fitness, Orangetheory Fitness, UFC Gym and Gold’s Gym. But since last year it started spreading its platform in in-ternational markets, with the opening of an office in London in August.

Previous investors, from Jav-elin Venture Partners to Nokia Growth Fund and DFJ Frontier, took part in the latest round as well. The company from San Francisco previously raised $15.6 million in 2012 and

$18.6 million in 2014. After that second fundraise, which was led by Nokia Growth Fund, Netpulse bought Club Apps for an undisclosed sum.

August Capital is a Califor-nia-based venture capital firm established in 1995, which manages more than $2.5 billion in committed capital, focusing on companies in the informa-tion technology business.

“While lots of fitness tech-nology companies compete for consumers outside of the gym, no one even comes close to Netpulse inside the gym,” Dave Marquardt, founding partner of August Capital, said in a state-ment. “They were the leader in bringing entertainment, work-out tracking and virtual scen-ery to nearly all of the brands of cardio equipment, and now they are the clear leader in

bringing a sophisticated mobile app to fitness clubs throughout the world.”

John Gengarella, chief exec-utive at Netpulse since June 2015, said in a statement that the company has implemented many of its plans in the last months, starting with the com-pany’s move into international markets.

The company’s London of-fice is about to launch apps for three big European fitness chains, in the U.K. and France. Other focus markets in Europe are Germany and Scandinavia, said Alex Peacock, who became vice president of Netpulse’s in-ternational business last year. He supervises the European expansion from London, as well as Netpulse’s business in other markets outside of North America.

Peacock said that the fund-raising would help Netpulse to explore global markets as well as adding functionalities to its products. Earlier this year it launched mobile app features meant to facilitate the acqui-sition of new customers. Over the next months it will add new workout management features and an add-on for feedack.

Netpulse raises $13 m for global expansion

Netpulse

Tech Briefsn Under Armour is moving to take advant-age of the billions of physical activities and meals logged on its digital fitness platform to push its apparel and footwear. The com-pany has invested $710 million to buy three connected fitness companies and it has built up a digital community of 170 million members - with platforms from MapMyFit-ness to Endomondo, MyFitnessPal and the group’s own UA Record. The U.S. company will capitalise on these investments through UA Shop, a mobile app that could make suggestions for shoes and footwear based on the activities of the user. For example, if a member logs in plenty of treadmill-based training, the app could send tips on Under Armour’s latest running shoes. Nike took a similar approach with the updated Nike+ app, which provides information about products and events as well as targeted pur-chase suggestions. Under Armour reported $53.4 million in turnover from its connected fitness division last year but Kevin Plank, the company’s chief executive, has repeatedly made it clear that the division was meant to drive much broader growth by providing unparalleled insights into consumption and workout habits. Customers would have to opt in for UA Shop, meaning they could continue to use other apps owned by Under Armour without any unwanted shopping tips. The Baltimore-based group says that members of UA Record and MapMyFitness may sync their existing account information to UA Shop, while MyFitnessPal and Endo-mondo integration is to be added shortly.

n Polar reports that it has teamed up with Les Mills, adding another motivational dimension to the company’s group exercise programs. The idea is that the heart rate monitoring devices of the Finnish sports and fitness technology group should allow Les Mills participants to keep track of their workouts and ensure effective exercise. “The personalized and adaptive heart rate guidance that Polar provides inspires people to get the most from their workouts. Team this with Les Mills’ proven workouts and people get the results they desire and in turn, continue to fall in love with fitness,” said Vaughan Schwass, chief executive of Les Mills Enter-prises, in a statement. The two companies add that this could work whether the wearers are sweating in a fitness class or in their living rooms with the group’s workout streaming service. Polar will be taking Les Mills workout sessions further with the Polar Flow on-line platform and app: When syncing their devices with Polar Flow, the participants will be able to check out details of their workout and to receive guidance and suggestions for long-term training programs. As part of their wide-ranging partnership, the two companies are working together on product development, joint research and more integration of Les Mills workout information and Polar devices. The deal should be particularly helpful for Polar, which is strongest in outdoor training activities so far, to make further inroads into the indoor training market. The Finnish brand will get further exposure as a partner of the global Les Mills Live events.

n TomTom has become the wearable tech partner for Pure Gym, the leading British low-cost gym chain, in a tie-up that is meant to make fitness and technology more accessible. TomTom has been involved in the fitness market for the last three years with its GPS sports watches. The Dutch company has already been offering three months of free membership to Pure Gym clubs with the purchase of fitness watches from January to March this year. The two parties are now starting to set up TomTom branding in Pure Gym clubs around Britain. Pure Gym has more than 800,000 members at 150 sites across the U.K., making it the largest in the country for both measures. Andrew Stocks, sales and marketing director at TomTom, said in a statement that the operator’s scope and its strategy to make fitness facilities more accessible for consumers provided a strong platform for the technology company to engage consumers with its fitness watches. Pure Gym points out that the use of wear-able technology to achieve personal fitness goals has been on the rise in the country: Judging from research by Mintel, sales of wrist-worn fitness devices reached more than 3 million in 2015, more than doubling compared with the previous year. The group struck several other partnerships in the last months – with a healthcare company that will offer access to Pure Gym locations for its private medical insurance members, and with the organisers of alternative triathlon and running events.


Community

ANIF, the association for Italian fit-ness clubs, obtained firm support at its annual congress in Rimini for proposals to alter the status of

gym operators, which are meant to turn fitness into a full-fledged economic sec-tor and to stimulate entrepreneurial in-vestment in the business.

ANIF has been working on the pro-posals as part of wider discussions on a “framework law” for the Italian sports and fitness sector. Giampaolo Duregon, ANIF’s president, described the potential changes to about 200 delegates at Rim-ini Wellness as a “turning point” for the industry.

One of the most important propos-als from ANIF’s standpoint is to launch a new, alternative status for fitness clubs, the “aziende sportive dilettantis-tiche con fini di lucro”. The association estimates that more than half of Ital-ian gyms currently operate with a non-profit status, which provides significant advantages but makes it harder for the owners to cash in profits. The gist of the proposal is that Italian fitness club own-ers could pay more social contributions, in exchange for an alternative status - allowing for a more business-oriented approach without the costs of a full-fledged corporate structure.

The proposed reforms of the sports and fitness industry were strongly backed in Rimini by Daniela Sbrollini, a member of parliament who was appointed as a spe-cial delegate for sport by Matteo Renzi, the prime minister (the Italian government doesn’t have a ministry for sports as such). Sbrollini received a standing ovation as she vowed to fight for the sector.

A key objective described by Sbrollini is to “give entrepreneurial value” to the fitness market. She supported clear rules and standards for the management and professionals in the sports and fitness sector, adding that they could favour in-vestment in the Italian economy.

Nerio Alessandri, founder and chief executive at Technogym, praised the pro-posals as a means to support health and fitness in Italy. He agreed that clear rules were required to move the industry for-ward and that the framework law would be most useful to add business value to the country’s fitness sector.

There are an estimated 7,300 private health and fitness clubs with 5.1 million members in Italy, where the industry is particularly fragmented, as described in the European Health & Fitness Market Report by Deloitte and Europe Active. ANIF, which represents about 600 Italian gyms, is apparently becoming increas-ingly influential in Rome and it struck a partnership with Europe Active last year.

As announced earlier, Rimini Well-ness was also an opportunity to update Italian fitness club owners on the Euro-pean Register of Exercise Professionals (EREPS), managed by Europe Active and its partners around Europe - including ANIF in Italy. Julian Berriman, direc-tor of the professional standards com-mittee, was in Rimini to provide more details, as well as Gabriel Sáez, Europe Active board member and president of Ingesport, the company behind Go Fit in Spain and Portugal.

High-voltage get-together in Rimini

The Adidas Group has filed a case with an administrative court in France to obtain a ruling on the fis-cal implications of its corporate gym

and other wellness facilities, after French authorities opined that they should be de-clared and treated as taxable benefits in kind.

The ruling in this case, for which a date has yet to be set, could provide more clar-ity on the status of such facilities in France, at a time when employers in many Euro-pean countries are striving to support the health of their workforce with a variety of investments and benefits.

The filing comes after a standard inspec-tion last year at Adidas France by URSSAF, the independent French organisation that is in charge of collecting social security contributions from employers - to support the country’s social security system.

The Adidas group’s French offices fea-ture fitness facilities as well as a resting room and a massage service. URSSAF apparently judged that such services should be regarded as benefits in kind - described as goods or services offered to employees for free or at a price well below the market price, which are to be reported and taxed.

But the Adidas group disagrees with this analysis, as outlined in a contribution to the Revue Parlementaire. The group suggests that the attitude of URSSAF in this case contradicts the government’s efforts to support healthy workplaces in France.

“On the one hand, there is a law and po-litical personalities that support our com-mitment to favour the well-being of our employees at work, and on the other hand an independent organisation is hamper-ing our corporate project,” said Sandrine Sheer, human relations manager at Adidas France, in the publication.

Giampaolo Duregon, speaking at the ANIF congress in Rimini.

Adidas moves to clarify French rules on corporate wellness

The Italian fitness industry was in an upbeat mood at the Rimini Wellness fair, which drew a record number of visitors over four days

from June 2 and reinforced its standing as an international fair to launch a wide variety of fitness classes.

The organisers counted more than 266,000 visitors at this 11th edition, which was an increase of about 2%. They boasted a 30% increase in foreign visitors, driven by Spain, Russia and other east European countries.

The halls and outdoor areas of the fair were packed with consumers who jostled to take part in high-voltage (and sometimes ear-splitting) group ses-sions – ranging from Les Mills classes with hundreds of people taking up en-tire halls to walking and aquatic fitness classes conducted in the outdoor area, and smaller group exercises organised by some of the equipment suppliers.

“There’s no place like FIBO but Rimini is getting more influential in terms of group classes and the number of inter-national customers has also been grow-ing, mostly from other southern coun-tries,” said one of the exhibitors.

While Technogym predictably occu-pied a prominent stand at the fair, many other big equipment suppliers made the trip, such as Life Fitness and Matrix. The organisers said about 400 companies were represented, focusing on fitness equipment, programs and nutrition.


Gyms

Nuffield Health is to be-come the second-larg-est British operator in number of clubs after

the intended acquisition of 35 gyms from Virgin Active.

The buy publicised today calls for all members and teams of these Virgin Active clubs to be transferred to Nuffield Health. It was already the fifth-largest player in the U.K. market with 77 gyms at the end of last year. The deal would expand its net-work to 112 locations, second only to Pure Gym.

Apart from its gyms, Nuffield Health runs 31 hospitals and over 200 corporate fitness centres, and it has moved to-ward further integration of the related services in the last months. The company de-scribes the projected acquisi-tion of the Virgin Active sites as a significant step in its strategy to provide a connected health and wellbeing service across the U.K.

“This acquisition is a great move forward and allows us to increase the pace of delivery of our strategy and our charitable purpose, to help people achieve, maintain and recover to the level

of health and wellbeing they as-pire to,” said Steve Gray, chief ex-ecutive at Nuffield Health.

Virgin Active had 96 gyms in the U.K. at the end of 2015, with 371,000 members and sales of £311 million (€391 m), which made it the largest in the country.

The divestment leaves Vir-gin Active with 61 gyms in the British market. “This transac-

tion is an acceleration of our global strategy to focus on high end clubs in metropolitan ar-eas. We will have a far more focused UK business with par-ticular strength in London, the South East and bigger towns and cities,” said Paul Woolf, chief executive of Virgin Active Group.

The group started rejigging its British clubs with three con-

Photo: Nuffield Health

“The level of interest in our IPO under-pins our strong belief that we have an at-tractive investment story with significant growth and value-creation opportunities, with a strong margin profile and cash generation,” Moos added. He reportedly shrugged off the bumpy start of BFIT shares in Amsterdam on Friday as “just the beginning.”

Basic-Fit says it will use the net proceeds of about €350 million from the sale of new shares to refinance some of its debts and repay its shareholder loans in full, which should help to support further expansion.

The offered shares amount to 48.8% of Basic-Fit’s share capital after the IPO, ex-cluding an over-allotment option of up to 15% of the offer shares.

3i Group, the investment company that bought into Basic-Fit in December 2013, said it reduced its stake in the fitness group from 44.4% to 23.7% (before the green shoe option). AM Holdings, which is controlled by Moos, holds a stake of 22.4%, which would be reduced to 20.3% if the over-allotment were fully exercised.

3i said that its gross proceeds from the partial sale reached about £89 million

(€113 million) and that, at the offer price, its remaining stake of 27.3% was worth about £153 million (€194.5 million). Ba-sic-Fit’s enterprise value was set at €275 million when 3i invested €97 million in the fitness group.

It had previously been said that 3i held a stake of 52%, but that apparently included the interests of a co-shareholder.

As previously reported (Fitness News Europe #8), the offering was based on an expansion plan in which Basic-Fit identi-fied potential for 900 more budget gyms in the four major markets where it operates.

Basic-Fit spotted the largest potential in France, where Basic-Fit had 32 clubs at the end of March but its analysis suggests that 485 low-cost gyms could be added in the country. The potential is estimated at 245 more budget clubs in Spain, where Basic-Fit had 26 clubs at the end of March. The analysis even suggested more poten-tial in Belgium, where more than half of all fitness club members work out at Ba-sic-Fit.

Among considerations that may have contributed to the pricing, some special-ists wondered if the well-oiled model that reshaped the Dutch and Belgian fitness

markets could be rolled out as efficiently in other countries. The IPO also took place at a time of market uncertainty, a few days before the British referendum on Brexit.

Another potential factor is the weak stock market performance of The Gym Group in the last few weeks. Shares of the British budget gym operator, probably the most suitable benchmark for Basic-Fit in Europe, tumbled by more than 20% in May, although the trend has been more positive so far in June and their price re-mains comfortably above the 195 pence set for the IPO in November.

Basic-Fit’s supervisory board was due to be formally enlarged today with two new members: Herman Rutgers, who has spent the last two decades in the fitness industry, with Life Fitness and as a board member of Europe Active, among others; and Carin Gorter, an independent banking professional who previously spent twelve years at ABN Amro Bank.

Ronald van der Vis, former chief execu-tive of Esprit Holdings, remains chairman. The two other members are Pieter de Jong from 3i Benelux, and Hans Willemse, man-aging partner at Craic Capital.

Nuffield Health buys 35 Virgin Active clubs

...continued from page 1

The sale was announced as Brait, the South African private equity firm that bought Virgin Active in April 2015, reported a turnover of £421 million (€530 million) for Virgin Active in Europe in

2015, as part of its own results for the fiscal year until the end of March. The figure is adjusted for current clubs and constant currencies. On the same basis, the turnover of the European clubs was up by 3% and their EBITDA jumped by 8% for the year.

Along with its 96 clubs in the U.K., the group’s Euro-pean business included 33 clubs in Italy, nine in Spain and four in Portugal at the end of 2015. These clubs had 566,000 members, a rise of 4% adjusted for the ten clubs exited in 2015. Along with openings and upgrades in Brit-ain, Virgin Active reinforced its Italian business by buying three clubs in Milan and opening another in Turin.

Europe made up by far the largest share of the group’s global sales, which reached £658 million last year. Asia Pacific only contributed £36 million but the group said earlier that it would invest £150 million to open up to 30 clubs in South East Asia. More on Virgin Active in Fitness News Europe #10.

cepts: high-end “Collection” clubs, larger family clubs and racquet clubs. It intends to up-grade ten more London clubs to the Collection concept, adding to eleven such clubs in Britain. Another is due to open in Mansion House later this year, using £6.5 million from the sale to Nuffield.

The transaction has been approved by both parties and

should be completed in the third quarter, subject to the transfer of existing landlord agreements and consultation with employees

Nuffield Health moved into the consumer health and well-being market with the acquisi-tion of Cannons Health Club in 2007. It already acquired nine Virgin Active sites in Britain two years ago.


Gyms

Turkish dismay over Jatomi closures

As Jatomi’s clubs were abruptly shut down, anxious members formed online groups

exchanging information to try and recover the remainder of their memberships. Some sources alleged that Jatomi continued to take on long-term memberships in the days be-fore it filed for bankruptcy in Turkey, and that some staff had not received all of their pay.

Jatomi said that the Turkish business has been left with “substantial cash balances and tangible assets” which the trustee will liquidate. “None of the shareholders in Jatomi will receive a return on their in-vestment in Turkey as all pro-ceeds from the liquidation will be used to repay employees, members and the Turkish tax authorities,” said Brennan in a second statement. The trustee had yet to be appointed at the end of last week.

The decision to shut down the Turkish business was taken about two months after the ap-pointment of Trevor Brennan at the helm of Jatomi Fitness. This international fitness club executive took over from Tracy Gehlan, who left the company after just over one year, as part of wider management changes at the head office in Warsaw.

When Brennan assumed the

leadership, Jatomi had 64 gyms in Poland, the Czech Republic, Romania and Turkey, along with several Asian markets.

Jatomi Fitness emphasised that the decision to shut down the Turkish operations was taken after much effort to make the business sustainable.

“Our attempts to save the business, which included val-iant tenacity from our team in Istanbul unfortunately did not yield the return that was required,” Brennan said upon the announcement of the bankruptcy. “It soon became very apparent that we could no longer financially support the business in Turkey with-out significantly affecting the sizeable number of members that we have within our global operation.”

As the closures caused some agitation in Turkey, Jatomi pro-vided further details about the events that led to the decision. It said that an independent re-view of the business had been carried out by a major Brit-ish accounting firm, at the in-struction of the Jatomi group’s board.

The Polish group claimed that “the rents paid by Jatomi Fitness Group were signifi-cantly above market rate and the clubs’ landlords were un-willing to assist with changes that would enable the com-pany to continue operations.”

Jatomi went on to claim that its efforts to re-negotiate leases were denied by landlords who “have proven to be intransigent and unsympathetic to the busi-ness needs.”

Although Jatomi did not dis-cuss the market situation, it had to deal with sharp competition from MACFit, a fast-growing competitor owned by Turkish investors, working with far more judicious leases.

At a meeting on May 24, the board “took the view that it

could not recommend further cash injections into the oper-ation” and a unanimous deci-sion was made to immediately put the Turkish company into administration.

The Turkish businessman who declared interest in Jatomi is Hasan Ipek, the owner of Sport Dunyasi, which is one of the leading traders in fit-ness equipment in Turkey. The company distributes its own brand of commercial equip-ment, Hattrick Pro, as well as several other brands, such as Adidas table tennis equipment,

a swimming brand from Ma-laysia and some Reebok fitness products for home use.

“The Turkish industry is growing and we think there is plenty of opportunity for de-velopment,” said Ebrun Ipek, Hasan Ipek’s daughter and partner at Sport Dunyasi. She admitted that the company has no track record in running fitness clubs, but added that it was very familiar with such operations since it was deliver-ing fitness equipment to many other clubs, as well as hotels and municipal facilities.

Jatomi was apparently ea-ger to emphasise that John Caudwell was not involved in the decision to pull out of Tur-key. The investment arm of the British businessman, who co-founded Phones4U, started investing in Jatomi in 2012 and has since acquired a majority stake in the fitness group.

Brennan’s statement says that Caudwell has “invested significantly” into the group since he bought his initial stake, and that a large share of this investment has been used to sustain the Turkish busi-ness. It added that Caudwell was a “passive angel investor” and not a member of the board that decided to cease Turkish operations. “There has been no loan repayments, no dividends and no repatriation of money out of Turkey,” the group said.

The group wants to continue renovating and upgrading existing clubs, while rein-forcing its network in Paris with about one opening per year - alternating medi-um-sized gyms and full-fledged fitness hubs such as the One club opened in Paris Saint-Lazare in April.

Hédin says that this opening was a catalyst for the deal with LFPI. The hub spreads on 3,000 square meters, with a premium gym and three independent studios for CrossFit, Les Mills Immersive cycling and boxing. “It clearly showed our ability to capture all the trends in the fit-ness market,” said the chief executive. He added that One Saint-Lazare has drawn about 1,000 members in one month and that it should be profitable this summer.

As previously reported, CMG Sports

Club is also considering expansion in other major European cities, to replicate the strategy that reinforced its market leadership in Paris in the last three years. The takeover by LFPI should make it much easier to finance such investments, as the previous structure involved a substantial level of indebtedness.

Silhouette is a Swiss chain with 20 gyms with sales estimated in the range of €40 million, which is managed separately. The takeover relates to both chains, although it appears that Silhouette was formally purchased by a separate entity.

Sébastien Duvanel, chief executive at Silhouette, says that the takeover should make it easier for the Swiss chain to invest in the upgrading of its existing clubs. “Our priority is to have impeccable clubs taking advantage of all the latest digital technol-ogy,” said Duvanel.

When it comes to further openings, Sil-houette wants to reinforce its strong posi-tion in existing regional markets. Silhou-ette is a market leader in Geneva, where half of its clubs are located. The group’s two latest openings occurred in Geneva, with two Pure clubs.

Silhouette is the third-largest player in the Swiss market after the Migros group and Let’s Go in number of clubs. While ac-cess to Silhouette clubs amounts to 1,199 Swiss francs, the price rises to 1,700 Swiss francs for the Pure clubs.

LFPI Group describes itself as an alter-native asset manager with more than €3 billion of assets under management. It in-vests in private equity, private debt, real estate and asset management.

Duvanel denied a Swiss report that LFPI Group intended to swiftly offload the Swiss fitness chain again.

Photo: Jatomi Fitness




Gyms

Anytime Fitness, the American fran-chising concept for gyms that are “always open”, is getting started with Italian franchises after the

opening of a club by its master franchisee in Rome.

Domenic Mercuri, the Australian busi-nessman who obtained the master fran-chise for Anytime Fitness in Italy last year, says he is targeting franchises all around the country.

Mercuri opened his own gym of about 400 square meters on the Viale Libia in Rome, with a pajama party held about two weeks ago. He said that nearly 300 people have signed up for membership, which comes at a cost of €50 including all classes. He estimates that the business should reach break even with about 350 members.

“People appreciate the concept of being able to work out at any time and particu-larly on Sundays, when most of the other gyms are closed in Italy,” said Mercuri.

Mercuri said he was inspired by the rapid spread of Anytime Fitness gyms in Australia, where the concept has taken on such dimensions that there is a shortage of available franchise territories. Australia has turned into the second-largest mar-ket for Anytime Fitness, with a network of more than 400 gyms in the country.

On his business travels in Italy Mercuri decided to study the fitness market and be-came convinced that the market was ripe

for Anytime Fitness. “There’s fast-growing enthusiasm for fitness in Italy but no fran-chise model on the market that is really catching that growth,” said Mercuri.

While his parents emigrated from Italy to Australia, Mercuri moved in the oppo-site direction, from Adelaide to Rome, to get the Anytime Fitness concept started in Italy.

“We have already received enquiries from many people who are very eager to move forward in all parts of Italy, from Sic-ily to Florence and Turin,” said the master franchisee.

Italy and Sweden are two of the latest Eu-ropean countries where Anytime Fitness has appointed master franchisees. The U.S. company wants to continue its European expansion in countries such as France and Germany, which were described as “pri-ority future markets,” by John Kersh, vice president of international development.

Clubs DiR, which is strongly established with nineteen fitness clubs and 70,000 members in

the Catalan market, wants to expand around Spain through three franchised concepts of fitness boutiques specialising in boxing, yoga and proximity gyms.

The Catalan group con-trolled by Ramón Canela has planned to open three more DiR clubs in Barcelona this year, but further expansion should go the franchises – around Spain and potentially other markets.

The existing clubs are all in and around the Catalan capital. They are often large facilities, reaching up to 13,000 square meters, some of them with facilities such as swimming pools or padel courts.

DiR has been hard-pressed to expand in the last years amid the tough economic situation and the rise of low-cost opera-tors in Spain. The Catalan oper-ator went through some finan-cial restructuring to enable a return to growth.

The franchising business should thus allow DiR to le-verage its resources and ex-pand in other mar-kets, with-out major capital in-vestments. The opera-tor points out that the b u s i n e s s it has built up over more than three decades adds value to the franchises in terms of

brand recognition as well as well-oiled operating systems and training methods, among other things. DiR says that the three franchise concepts are meant to fit a variety of re-quirements in terms of space and investment capability.

The most affordable franchise option is Boxing DiR, which fits for locations of up to 300

s q u a r e m e t e r s . The con-cept in-c l u d e s organised b o x i n g s e s s i o n s as well as free work-out space. The group

already has boxing facilities in some of its existing clubs.

The second option is Yoga One, which the company has already opened in two loca-tions – one of them in a DiR club and the other a standal-one club of about 400 square meters opened in the Sant Gervasi district earlier this year. The Yoga One franchis-ing concept was developed for locations of 250 to 450 square meters, with a cost estimated at €155,000.

The third franchise concept consists of full-fledged fitness studios of 500 to 1,200 square meters with cardio equipment, strength training gear and free weights, with one or more spinning studios and classes. The business model for this concept starts with invest-ments from €260,000, with an option for DiR to invest half of the costs.

Photo: DiR

DiR wants to expand around Spain with franchise concepts

Anytime Fitness starts in Italy

Pajama party in Rome. Photo: Anytime Fitness

Anytime Fitness has reportedly appointed Emilio Quero Ro-dríguez to become its general manager in Iberia. CMD Sport

reports that he was introduced to fran-chisees at an annual convention held in Barcelona last week.

This comes after the departure of Rod Hill, who has left Anytime Fitness but remains a franchisee with a club near Barcelona, as reported in our pre-vious issue.

Anytime Fitness said at the time that it was appointing a manager with a strong track record in the franchis-ing business. It turns out that Quero was previously business development director at Regus, a company specia-lised in workspace infrastructure, af-ter several years as senior manager for franchise operations and business development at Burger King and Ibe-rian expansion director at Bricorama, among others.

After assignments at Fitness First and El Gym, Hill brought the Anytime Fitness franchise into Spain just over four years ago and turned it into a group of 21 franchises, with three own locations.The U.S. company’s target is to raise the number to 40 Spanish clubs at the end of this year and to 200 in 2020.

The global network of Anytime Fit-ness reached more than 3,000 fran-chises in over 20 markets last year and it aims to raise the figure to nearly 3,500 franchises this year.

june 14, 2016 issue n°9 cmg and silhouette at …...reassured that it was reporting ample growth...

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