Fitness First results show no gain without pain

Kasmira Jefford
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FITNESS FIRST, the embattled health club chain, has slumped to a £672m loss after painful restructuring earlier this year that saw it narrowly miss going into administration.

Club closures and one-off accounting charges have dragged the group to a pre-tax loss of £671.5m in the year to 31 October from an £82.9m loss last year.

Revenue increased by 3.4 per cent to £608.3m, despite the number of clubs dropping from 429 to 417.

The debt-laden group was rescued by US hedge funds Marathon and Oaktree Capital in February, which agreed to wipe out £600m of debt in return for a 75 per cent equity stake.

The debt-for-equity swap left the private equity backers BC Partners, which bought the chain in 2005, with a small shareholding.

Fitness First is now going through a company voluntary arrangement (CVA), with its creditors, mainly landlords, who agreed to renegotiate rents on 79 gyms to help pay down debt. It is selling 68 gyms as a result.

Chief executive Andy Cosslett said: “It is no secret that 2011 was a difficult year for Fitness First as it struggled under an impossible burden of debt.

“During this most difficult time the business still managed to grow the top-line and made over £100m...this shows the potential that Fitness First has as a brand now that our troubles are behind us.”