Mike Metcalf, who helped to turn Burberry from a fashion also-ran into a must-have label, is to head up Fitness First - the gym chain that was taken private in a £204m management buy-out last year - replacing its founder Mike Balfour.
The decision to appoint Mr Metcalf yesterday sparked speculation that the group's private equity owner, Cinven, was limbering up for a speedy exit via a new flotation on the stockmarket.
Mr Metcalf, who will join Fitness First next month, announced his decision to stand down as Burberry's chief operating officer last August in order to seek a chief executive's post. Analysts said his experience at the luxury goods group, which was spun off from its parent GUS two years ago, would prove useful for Fitness First's eventual re-listing.
Mr Balfour, who opened the first Fitness First club 11 years ago in Bournemouth, said Mr Metcalf had "absolutely been my choice" as the man to "lead the business for the next five years". He denied that Cinven had been pressed him to step aside, adding: "It really was the other way round. We needed to plan for succession; I'm getting older."
As with a number of other quoted health club casualties, Fitness First paid the price of over-expanding at a time when its pool of potential members was shrinking. Its shares collapsed from a near 500p high in 2002 to Cinven's 175p-per-share takeout price.
Mr Metcalf, who was given options worth £1.3m when Burberry floated, declined to comment on whether the chance of running a private company that might eventually float on the stock market had attracted him to the job. But he said the business, which owns 383 clubs in 15 countries, had "great growth opportunities" and its "future prospects interests investors". He will take an undisclosed stake in Fitness First, boosting the 18 per cent already held by the group's management.
Mr Balfour, who made £5m when the group was taken private, will become its deputy chairman from August. He said stepping back would not be hard "because I've had a long time to prepare for it".
With a 6 per cent stake in the business, he said his "personal preference" would be for Cinven to seek a flotation rather than a trade sale but insisted: "That's a good number of years away."
Although analysts believe that the outlook has picked up for health club groups, many think that Fitness First will struggle to expand its UK estate from 163 to its target of more than 300.Reuse content