Fitness First is a pioneer global operator of fitness facilities that once had an iron grip on the Australian market. However, this dominance led to complacency and a poor public perception that drew many customers away from the brand. Andy Cosslett, CEO of Fitness First, joined the company in a bid to revitalise the organisation and dispel the bad publicity it had garnered over the years.
The ownership changed hands 18 months ago, which is when I arrived, and the new ownership brought me in. The issues at Fitness First were, in a nutshell, that the previous owners overleveraged the company and put too much debt on the business. So, particularly when the financial crisis hit, some of the top line came under pressure. When the financial crisis really came in around the world, some of the top line in fact was felt by Fitness First and the business started to go down and the debt burden was still high, and the interest payments that they had to make were large.
As a result of that, they had to spend all their available cash paying the interest, and they werent able to invest in the products and in their customers. As a result, some of our gyms, particularly the older ones, started to get run down and they did not have the wherewithal to really invest and get them back up to speed. Customers and members see that, so they drifted away. At the same time, new competition arrived. So that combination of events led to the brand and the business coming under a bit of pressure, particularly in the UK and Australia, which is where we have been the longest.
We are on a journey to completely bring the business back. We have no debts on the business at this point. We might have a little bit going forward, but at the moment its debt free. We have the best balance sheet in the industry, and we have a great executive team of talent that Ive pulled together, taken from a wide range of industries and businesses. We have a supportive owner, and we are going to take this business back to the top of the pile. But it is hard work and we have to do it very thoroughly and very well because, in certain markets, we lost our way and we lost a lot of trust with our customers, and no more so than in Australia. So we are rebuilding the business brick by brick in this market.
