Gym and health club chain The Bannatyne Group has revealed it could rekindle plans for a stock market flotation within the next few years as it limbers up for expansion into Europe.
Chief executive Justin Musgrove told the Press Association an initial public offering (IPO) remains on the table for the firm, which is owned by Dragon’s Den star Duncan Bannatyne.
The chain had planned to raise £300 million by floating in 2016, but later pulled the plug on the IPO amid tumultuous market conditions sparked by the shock Brexit vote.
Mr Musgrove said while an IPO was not an immediate priority, he “can’t rule it out” as an option over the next three or four years.
He said: “Duncan has always said it remains an opportunity for us.”
“We have got some work to do and still have a lot of acquisitions to complete, but it’s very much an option that remains open,” he added.
In the meantime, the 71-strong chain is focusing on expanding further across the UK under aims to have around 100 clubs nationwide.
It completed four acquisitions in 2017, including its first club in Northern Ireland, and has more “careful” deals planned for 2018.
It has its sights set on Europe further down the line.
Mr Musgrove said a European launch could be possible within the next five years, with the market on the Continent driven by the low cost gym model and leaving a gap for Bannatyne’s affordable, premium offering.
He said its focus on this market has helped differentiate the chain in the UK and kept profits growing at a healthy clip despite stiff competition.
No-frills rivals are growing aggressively in the UK, with The Gym Group planning to add 20 sites this year.
“We had a dilemma three or four years ago when the low cost sector had polarised the market – the likes of Pure Gym created a vacuum in the market,” said Mr Musgrove.
“We had a decision to take the group low cost or upmarket.”
It has firmly focused on its niche, with a £50 million investment drive to upgrade existing health clubs, add new spa facilities and expand through acquisition.
The decision has paid off, with the firm recently posting a 57% surge in underlying pre-tax profits to £14.3 million for 2017 thanks to record turnover of £117.6 million as it increased its membership by 7.4% to nearly 212,000.
It saw spa revenues increase by more than 13% last year as it has opened nine spas to take the total to 46.
The group wants to have around 55 spas by the end of next year, with aims to boost revenues further by cross-selling treatments and facilities to existing gym members.
“The big prize in this sector is retaining your members – if more members are making use of the pool, and gym and having treatments as well, we believe we can keep these members for years to come,” said Mr Musgrove.
For the year ahead, there will also be further refurbishments, with £2.8 million being spent revamping changing rooms alongside further cafe bar upgrades.
Mr Musgrove said with the consumer market hammering players in the retail and restaurant sector, “it’s about making sure we don’t get complacent”.
As more people are using online work-outs to get fit at home, Bannatyne is hoping to encourage members to keep coming into gyms, with state-of-the-art equipment, as well as “virtual classes” in its studios on demand.
It is also soon to launch a tie-up with Hatton Academy – run by former boxing champion Ricky Hatton – to offer fitness programmes for its members.
Bannatyne Health Clubs was founded by chairman Mr Bannatyne in 1997, with the first site opened in Teesside in 1997.
The 69-year-old entrepreneur still owns 99% of the chain.