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Virgin Active reports increasing gym member terminations

South Africa’s largest health club chain Virgin Active says that a move to adjusted level 3 lockdown restrictions at the end of December 2020, has led to lower usage rates and an increase in member terminations.

The group’s holding company, Brait, said in a note on Monday (1 February), that despite the recent government enforced level 3 lockdown restrictions, its clubs have remained operational since re-opening on 24 August 2020.

It said that Virgin had benefitted from a steady improvement in member engagement, with utilisation rates increasing to 70% in December.

“However, as expected the subsequent level 3 restrictions – which include limiting the number of members in a club – have resulted in lower usage rates, an increase in terminations and lower sales.”

Virgin Active South Africa, Brait said, remains cash flow neutral at an operating level, and as at the end of December 2020 has sufficient liquidity to fund its business plan.

Virgin has approximately 138 gyms across the country, and approximately 670,000 members, with around a million total members in eight countries. This figure however, is down from approximately 1.1 million members reported in its most recent annual report, with around 715,000 members in July (2020).

The company said in November that it is likely to take at least 18-24 months to revert to 2019 levels.

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