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It may take years before we fully understand the economic impact of the COVID-19 pandemic, as well as the shifts in attitude that have come about as a result.

More businesses may choose to work from home, for example, and during the stricter levels of lockdown, South Africans took to working out at home, on their own or via online classes.

Virgin Active has felt the full brunt of the lockdown’s economic impact, and in July the company was talking about slashing the salaries of thousands of employees.

That’s only part of the equation, because the fitness chain has also seen membership numbers plummet, both abroad and in South Africa.

Moneyweb reports that Virgin Active has lost more than 100 000 members globally since the beginning of this year, with revenue down a full 50% in the nine months from January through to the end of September.

Yes, restaurants, hotels, and airlines have suffered greater drops in revenue, but none of those is based on a subscription model.

Many memberships are currently ‘on freeze’, meaning membership fees haven’t been taken for months. In South Africa, a full 30% are currently frozen, as this Moneyweb table shows:

Image: Moneyweb

Keep those numbers in mind when we talk about crunch time:

With October being the last month of the membership ‘freeze’, much hinges on how many people simply decide to cancel their memberships before the debit order run (or, indeed, in early December when they are reminded they still have a gym membership)…

How this plays out across its portfolio of clubs will be seen soon enough. A further two clubs in South Africa were closed in 2020, following the closure of four last year. This was the first time the group ended with a net fewer clubs in SA (any closures were offset by openings).

With physical outlets closing, Virgin Active has looked at ways to pivot into the digital space.

In Italy last month, ‘Revolution’, a product that streams Virgin Active content to subscribing members, was launched.

Whilst there has been growth on that front, a subscription fee is far lower than an actual gym membership would be.

As is the case with so many things right now, it’s a matter of time will tell, but there’s no denying that Virgin Active’s finances are nowhere near as healthy as they once were.

[source:moneyweb]