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Fitness First losses hit £61 million

Fitness First said work to upgrade its gym venues is already starting to pay off as it vowed to speed up the refit scheme despite a hefty year-end loss.

Restructuring costs in the wake of its rescue by a distressed debt specialist two years ago helped it make a £61 million pre-tax loss for 2013, even as new-look health clubs pulled in more members.

But Fitness First chief executive Andy Cosslett said a strong performance from the rebranded clubs and its growth potential in Asia, where it opened seven new clubs over the year, will see it stabilise towards the end of 2014.

"It's about shifting the pendulum back to growth," he said in an interview with The Times.

"New clubs are going up, but the uninvested clubs are still going backwards. Until we fix those, they're going to continue to drag us back."

Revenues slipped 13% to £511.4 million for the year to the end of October as the group cut its worldwide portfolio of clubs by 70 to 335. It has shed almost half of the 153 clubs it had in the UK, where revenues fell by £42 million to £85 million.

However, backed by its new shareholder Oaktree Capital Management, Fitness First said it will invest £101 million in upgrading 108 clubs this year, after spending around £75 million in 2013 on refits including new equipment and smarter changing rooms.

The gym chain has so far seen most of the fruits of its labour in London, where in the last five months re-branded clubs have pulled in 28% and 25% more new starters in South Kensington and Tottenham Court Road, respectively.

It now operates 79 clubs in UK, which has seen a 15% jump in joiners in the five months to March overall, compared with last year, resulting in 10,000 more members.

According to a study by Deloitte, the fitness sector in the country is set to grow by 2.1% a year until 2018, bringing in 800,000 fitness conscious gym goers.

But Fitness First is seeing more near term joy in Asia, where revenues shot up 9.8% on the year to reach £136 million. Adjusting operating profit in the region increased 14.5% to £20.5 million.

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