Latest News

Back to Latest News back

 

Analysts question performance of Goodlife Health Clubs

Analysts question performance of Goodlife Health Clubs
May 2, 2015

The performance of the Ardent Leisure Group's Goodlife Health Clubs has been questioned by business analysts, with Ardent’s once high performing division being assessed as facing long-term structural challenges.

Having reached a high of $3.49 last year, shares in Ardent Leisure fell dramatically in March following the company's announcement of below-expectation results for the second quarter of 2014/15, largely influenced by Goodlife Health Clubs’ performance, and the departure of group Chief Executive Greg Shaw.

Following this, analysts at Deutsche Bank last month highlighted that Goodlife Health Clubs had materially underperformed due to increased competition in Australia’s fitness club sector.

According to the Australian Financial Review, Deutsche Bank suggested this drop in earnings as being caused by “structural change rather than a one-off issue and as such it lowered near-term earnings forecasts.”

Goodlife’s earnings declined 11% in the first half of 2015, as a result of increasing competition for customers in the fitness sector and Goodlife’s trial of a new flexible membership plan, which resulted in more people leaving the gyms than joining.

While the Deutsch Bank analysts rightly point out the increased competition in the sector, Australasian Leisure Management Publisher Nigel Benton highlights that this merely echoes findings from IBISWorld, published in February, that market saturation is expected to have a major impact on the Australian gym and fitness centre market in the coming years.

Benton believes Goodlife is particularly well placed in this market, stating “Goodlife wholly owns its 76 clubs around Australia, and this is a major long-term asset.”

While the massive growth in fitness clubs openings in Australia over the past five years has largely been through franchising, what analysts have thus far ignored, is that during the next 18 months a large number of these franchises, many of which were five-year deals, start to expire.

Benton sees this as creating a climate of considerable industry instability, suggesting “with many franchisees having linked a fixed-term franchise of, say five years, to a five year lease on their site and a five year equipment financing/leasing plan, the expiry of these deals will see them facing many questions in relation to the future of their business.

“In the early years of their franchises they probably made healthy profits but with increased competition in the last few years their incomes will have dipped.

“As a result, will they stay in the industry or, with their leases and franchise coming to an end, will they just walk away?

“At the very least, if they choose to continue operating, with an established site and membership base, clubs may choose to continue trading under their own brand rather than renew their franchise.”

This Benton feels, will leave the fitness industry’s many franchisors facing major hurdles in maintaining their numbers of franchised sites.

However, this change in the market will not aid Ardent Leisure in the short term, with some of the Group’s biggest shareholders reportedly unhappy at Greg Shaw being replaced by former Ardent Director Deborah Thomas.

According to media reports a group of Ardent's institutional shareholders have been considering calling an extraordinary general meeting in an effort to have Shaw reinstated as Chief Executive.

Greg Shaw (left) is leaving Ardent Leisure after 13 years, being replaced as Chief Executive by Deborah Thomas (right).

In other developments at Ardent Leisure, the Group’s media account will now be managed by Match Media.

As many as seven advertising agencies reportedly bid for the contact, worth $2.3 million in the year to March, an amount expected to rise to $10 million as Ardent ramps up its advertising in the coming months.

12th March 2015 - SHARE VOLATILITY AFTER ARDENT LEISURE ANNOUNCES NEW CHIEF EXECUTIVE

23rd February 2015 - AUSTRALIAN GYM MARKET TO REACH SATURATION WITHIN FIVE YEARS

19th February 2015 - ARDENT LEISURE SUFFERS PROFIT DIP

18th February 2015 - GOODLIFE BOLSTERS FULL-SERVICE OFFERING WITH 24/7 ANNOUNCEMENT


Asking a small favour
We hope that you value the news that we publish so while you're here can we ask for your support?

The news we publish at www.ausleisure.com.au is independent, credible (we hope) and free for you to access, with no pay walls and no annoying pop-up ads.

However, as an independent publisher, can we ask for you to support us by subscribing to the printed Australasian Leisure Management magazine - if you don't already do so.

Published bi-monthly since 1997, the printed Australasian Leisure Management differs from this website in that it publishes longer, in-depth and analytical features covering aquatics, attractions, entertainment, events, fitness, parks, recreation, sport, tourism and venues management.

Subscriptions cost just $90 a year.

Click here to subscribe.

 

supplier directory

The Complete Guide to Leisure Industry Products & Services.

See the directory see all

Altitude Training Systems

Also at 3 Squill Place, Arndell Park NSW 2148 ATS are global leaders in altitude training and research. From mask systems and inflatable tents to simulated altitude facilities, we help…

read more

Fitness / Sport / Technology

 
 

MYRTHA POOLS

Founded in 1961, Myrtha Pools® quickly became Italy’s première swimming pool company, and has since grown into one of the world's leading swimming pool construction…

read more

Aquatics / Design / Play / Waterparks / Wellness

 
 

HTS Group Ltd

HTS Group Ltd provides a complete design, system integration, installation and maintenance package to the transportation, traffic engineering, parking and sports timing industries in New Zealand,…

read more

Aquatics / Events / Sport / Technology

 
 

TECHNOGYM AUSTRALIA

Technogym is the leading company in the Wellness and Fitness field all over the world. With 2,200 employees, 14 branches in Europe, U.S., South America, Asia  and Australia, Technogym exports its…

read more

Fitness / Technology / Wellness

 
 

Perfect Gym

Perfect Gym Solutions is a software as a service (SaaS) solution purpose-built to service the fitness industry, with over 1000 clients servicing over 2 million gym members across 40 countries making…

read more

Access / Fitness / Marketing / Recreation / Technology

 
 

IEDM

iEDM integrate Design, Engineering and Delivery Management services to convert existing spaces into exciting new entertainment venues. Our team consists of highly qualified professionals with diverse…

read more

Consultants / Design

 
 

Enta Australasia

As of the 1st July 2018, Enta Australasia Pty Ltd/Best Union has been rebranded as VIVATICKET Pty Ltd.  Click here to view the VIVATICKET Pty Ltd listing.  19th July 2018 - ENTA…

read more

Technology / Ticketing / Venues

 
 

LES MILLS ASIA PACIFIC

Les Mills Asia Pacific Les Mills Asia Pacific (LMAP) have been setting the benchmark for providing professional fitness solutions across Australia and South East Asia since 1996. Our world renowned…

read more

Fitness / Technology / Wellness

 
 
 
 

get listed with our suppliers directory

Get your business noticed in our targeted directory. Viewed by 10,000 industry professionals per week!

list your business