Business

Virgin Active crosses 1 million members – still below pre-pandemic highs

Virgin Active has crossed the 1 million member mark around the world, with 625,000 members in South Africa alone. However, this is still 100,000 below its pre-Covid high.

This was revealed by Brait in a voluntary trading update this morning for the six months to the end of February 2024. 

Brait said Virgin Active is currently undergoing an operational and financial turnaround to streamline the business, bring costs down and increase its yield per customer. 

The higher-yielding international business, in particular, has benefitted from strong membership growth and higher yields, given price increases during the period. 

Overall active members increased from 972,000 in September 2023 to 1.01 million as of 29 February 2024. 

While this is an improvement, it is still around 100,000 below the company’s pre-Covid membership of just over 1.1 million. 

At its peak, it lost a third of its 1.1 million global members. Virgin is still struggling to attract these members back to their clubs. 

Virgin Active South Africa increased its active membership base from 606,000 in September 2023 to 625,000 as of 29 February 2024. 

Sales remain relatively robust, and management’s continued focus on membership engagement through the institution of a number of operational changes to address attrition is starting to benefit the business. 

In its last full-year results, Brait revealed that Virgin Active was struggling to retain members, particularly in South Africa. 

Virgin Active’s South African operations have experienced very high termination rates from customers and a high turnover of memberships. 

In the first nine months of 2023, the company sold 170,000 memberships but only registered membership growth of 31,000 at the end of the period.

This indicates a high turnover rate of memberships, with new customers signing up, but then a large proportion of them terminate the membership or existing members fail to renew.

The company said this was primarily driven by the poor quality of sales in the earlier part of the year due to a challenging economic environment. 

Italy continued its strong performance to the end of February 2024, with active membership increasing to 188,000.

The UK also benefitted from an increase in its active membership base to 140,000 with robust growth across its Provincial clubs, the London Residential clubs and the London Corporate clubs. 

The Asia Pacific territories showed positive momentum in membership growth and yield improvements. 

The international business is particularly important to the company as it brings in disproportionately higher yields from earnings in stronger currencies than the rand. 

The average yield on the portfolio has increased over the period. 

The increased membership levels and higher yields have positively impacted the ‘run rate EBITDA’, which, as of 29 February 2024, implied an EBITDA of around £55 million (R1.31 billion), up from £30 million (R715 million). 

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