Harm Tegelaars, chief executive of Cannons, says there are 700 quality clubs in Britain, but room for 1,400. Following the sale of the group's non-core businesses and the collapse of a merger with First Leisure's leisure operations, Cannons is focusing on organic growth.
It has earmarked pounds 100m for an expansion programme over the three-year period from January 1999. The plan is to open a further 21 clubs in the UK over the next 30 months. It has also just acquired the site for its first European club in Eindhoven, Holland.
The Pinnacle clubs should be rebranded as Cannons by the end of the year and the pounds 46m rights issue last month will help to underwrite the programme of openings.
Health and fitness is seen as such a promising growth sector that competition is fierce, with major companies such as Whitbread (with its David Lloyd concept), Greenalls and First Leisure all expanding rapidly. But Cannons has the advantage of focus and is the largest listed fitness operator in Europe, running 33 healthclubs and 15 gyms. It is also keeping a keen eye on costs with pounds 1.5m of savings promised next year.
On full-year profit forecasts of pounds 13.8m the shares - a penny up at 214.5p yesterday - trade on a forward p/e of 31; not cheap, but a good bet in a growing market.Reuse content