JOHANNESBURG - Sale of Brait SE’s Virgin Active fitness chain will be delayed as much as 18 months following closures of gyms to help contain the coronavirus.
Membership fees were frozen during the lockdown that started in March and it’s going to “take some time to get back to where it was,” said Peter Hayward-Butt, a partner at Ethos Private Equity, which became Brait’s manager on March 1. The South African investment firm said in November that it would look to sell assets over the next three to five years as part of a sweeping overhaul.
“Covid put a spanner in the works,” Hayward-Butt said in an interview. Yet Brait isn’t in a rush to sell the gym chain, which accounts for almost half its value, as the recent divestment of its stake in Iceland Foods and DGB, a South African wine producer and exporter, have “stabilized the base” and helped pay down debt, he said.
Virgin Active’s big-box format also allows the chain adequate physical distancing as outlets have re-opened, while smaller competitors struggle to accommodate members, Hayward-Butt said. Negotiations with landlords on rentals have meant an improved cost base, he said.
New Look Sale
The pandemic has also pushed out a potential ultimate sale of struggling U.K. fashion chain New Look. The retailer, which two years ago went through a U.K. court process that allows insolvent firms to reach agreements with creditors, has cut costs and improved online sales, Hayward-Butt said.
While many U.K. retailers may not make it through the pandemic, New Look’s management has focused on keeping enough cash flowing for the business to work, he said, putting it in a “decent position to survive and thrive on its long journey back.”
Brait reported earlier Wednesday that its annual loss widened to 1.02 billion euros ($1.16 billion) in the year through March, from 675 million euros a year earlier.
Shares of the company, which also owns the South African maker of Blue Ribbon bread and Snowflake flour, climbed 11% at 1:22 p.m. in Johannesburg, paring this year’s drop to 67%. Brait is among the 10 worst performers in the FTSE/JSE Africa All Shares Index this year.