Not much compares to the endorphin kick you get after a great gym sesh. Yep, I don’t care what anyone else says, dragging yourself out of bed and into a gym to do endless burpees feels GOOD (when you’re done).
Viva Leisure (ASX: VVA) is keen to become the endorphin dealer of choice for Aussies looking to shake up their fitness routines post- lockdown.
Despite recurring revenue 25.2% lower than the previous corresponding period (for the months of September and October) the Company has managed to tread water thanks to their well diversified portfolio across multiple Australian states. Queensland was the only state where business ran as usual. Mid October saw the recommencement of trade in the ACT and NSW, with Victoria following in late October/ early November.
Interruptions aside, the business grew during this time, adding 5 more locations to their portfolio since the prior corresponding period, bringing the amount of sites to 314.
There has been some member growth across brands as keen gym junkies seek to get back into routine, and those seeking to shift some COVID kilos sign up.
Brands under the Viva banner now include; HIIT Republic, Club Lime, FitnFast, Pinnacle, Psycle Life, Studio by Club Lime and GroundUp as well as aquatics and swim school facilities.
The Club Lime portfolio comprises 70 clubs and is the second largest non-franchised health club brand in Australia. FitNFast locations are being rebranded to Club Lime and refurbished.
Acquired in February 2021, the Pinnacle brand has 6 locations in its portfolio which are being internally converted to Club Lime, with rebranding of external signage. The clubs were recently transitioned to Viva Leisure’s direct debit system which is expected to accrue cost savings of approximately $20,000 per month in debit fees alone.
Viva’s new brand, HIIT Republic comprises 22 locations, the first of which was opened in March 2019. Average membership per location is 226 members (down from 250 prior to recent lockdowns). Mature clubs (over 12 months old) are expected to operate at an EBITDA margin above 50%.
The Group’s largest brand, Plus Fitness stalled in terms of growth plans thanks to COVID, however the pipeline of new locations to be secured remains strong including some in New Zealand and India. Viva is implementing initiatives to assist franchisees to ensure their businesses remain competitive and profitable.
Looking forward, Viva is keeping their growth focus on key corridors in Queensland and Victoria, opening new HIIT Republic sites in the two states as well as looking at acquisitions of various health clubs to a total of 22 new locations.
Commenting on the Company’s performance throughout September and October, CEO Harry Konstantinou said: “The latest reporting period (September and October 2021) has seen an immediate rebound of the business once locations were permitted to re-open. This is the expected behaviour due to the direct debit nature of the business.”
“Membership in October 2021 is less than 1% below the pre-COVID June 2021 closing member numbers, effectively back to normal within less than a month of the ACT, NSW and VIC re-opening.
“I look forward to the next bi-monthly report where I expect to be in a position to highlight the full run-rate of the business, uninterrupted with COVID lockdowns.”
Investors are sure to be rewarded for their patience as gyms remain open and more people seek to replace their lounge room gyms with the real deal.
Samantha Freidin is a business journalist at Emerald Financial whilst also completing a Masters of Marketing and Digital Communications at Monash University.
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