• Viva Leisure is making a comeback post-Covid
  • Stockhead reaches out to Viva’s CEO, Harry Konstantinou
  • Other health and beauty stocks on the ASX that could also make a comeback

Not many industries had been adversely impacted as much during Covid as the fitness industry.

At the height of the pandemic, all gyms in Australia were ordered to shut down.

Fitness Australia, the peak body representing over 25,000 members across the gym sector, said half of its “industry operators reported a complete loss of income” during the forced closures in 2020.

Around half of the industry’s workers had also quit their jobs, exacerbating the pressure on gym operators.

But things are starting to turn around now as the pandemic threat recedes.

Australia’s second biggest gym operator and ASX lister Viva Leisure (ASX:VVA) has already had a record start to FY23.

The company’s Annualised Revenue Run Rate (ARRR) was $130.2 million, up 41.9% since the beginning of the year.

It also achieved a record average monthly revenue run rate of $11.1 million, up 42% this calendar year.

Since December, Viva has also increased total members across all its brands to ~325,000, up by 28,000.

Recurring revenue

Viva Leisure owns a bunch of brands including its flagship Club Lime, Pinnacle Health Clubs, Fit n Fast, HIIT Republic and Plus Fitness.

Since reopening, the company has been on an expansion mode with the opening of its second corporate greenfield Plus Fitness site location in Glebe, Sydney and the acquisition of Plus Fitness Hocking in Western Australia.

It’s also on track to settle another three acquisitions in WA before opening a dozen other sites in Queensland and Victoria during FY23.

Speaking to Stockhead, Viva Leisure’s CEO Harry Konstantinou said that whilst the business is growing fast, what many people don’t get is that most of the revenue generated is recurring.

“As soon as we were permitted to reopen, it’s like a tap turning on for us in terms of revenue, because our members are very sticky. And they’re recurring revenue members,” said Konstantinou.

A tech prodigy who started an internet service provider (ISP) business at 15 and sold it at 25, Konstantinou said the gym business is very similar to the ISP business because it’s about recurring revenue and managing the churn rate.

Around 88% of Viva’s revenue is recurring and Konstantinou believes that people will always go back to the gyms (instead of staying at home to exercise in front of a TV) because what the gym provides is an experience.

“We are in the experience business. People want to go to the gym, they want to meet people, they want to meet and do a workout with their friends.

“And that will never change because it’s part of a lifestyle and that thematic is what we’ve explained to investors,” Konstantinou told Stockhead.

Viva’s technology

What differentiates the Viva gyms from other networks is its use of data and technology, including artificial intelligence (AI).

Konstantinou says the company analyses lots of data such as the ratio between male and female memberships – enabling it to tweak the fitness equipment ratio it provides at each site.

The technology could also analyse things such as the time each equipment is used the most, or why a member stops coming on certain days.

This clever use of technology has allowed the company to increase its portfolio utilisation, or the use of facilities, to 70% with plans of increasing that to over 75%.

“Every time you add a club, obviously that utilisation rate will naturally decrease because you’re adding for example 1000 square metres into that calculation, but you haven’t got the members yet,” explained Konstantinou.

“And for us, we’ve opened 41 clubs on average over the last three years. So we basically open or acquire a club every nine days on average.”

The company is also building greenfield sites, meaning that it could build the gym the way it wants, sometimes even putting two clubs next to each other.


Viva’s share price has dropped almost half its value in 2022, but now that things are looking up for the sector, Konstantinou believes investors may not have fully priced in the company’s potential growth.

The metrics show that’s indeed the case – with EBIT jumping from a loss of $3.8m in the first half of FY22 to a positive $9.3m in the second half.

“We’re going to open 50 new sites and five acquisitions in the pipeline right now. Plus we have got a really good banking facility that allows us to draw 70% on acquisitions.

“So we see a very significant upside, and I think that’s not necessarily what the market is currently seeing,” said Konstantinou.

Viva Leisure share price today:


Other health and beauty stocks on the ASX

These other health and beauty stocks could be the ones to watch as Australia and the world move on from the pandemic.

Silk Laser (ASX:SLA)

Established in 2009, Silk Laser has gained a reputation for Australia’s go-to clinic for all things laser, skin, inject and body treatments.

The company currently runs 127 clinics across Australia.

In FY22, the company surprisingly beat its market guidance of $20m, growing by 28% YoY and delivering a full year EBITDA of $22m.

Silk has made a strong start to FY23, and expects its growth trajectory to continue.

Pacific Smiles (ASX:PSQ)

Pacific Smiles operates over 120 dental centres nationally, and over 800 dentists are operating their practice with PSQ.

The company got hit hard during the lockdowns as walk in patients decreased dramatically.

But performance to date in FY23 is showing business volume and activity returning to pre-pandemic levels.

The company however says the level of growth is expected to be at a more uniform rate over a longer period compared to the post-lockdown surge levels seen in FY21.

Higher than normal cancellation rates and practitioner absences means appointments are continuing to be pushed out, but ultimately remaining in its books.

For FY23, PSQ has provided the following guidance:

  • Patient Fees between $270m and $285m (vs $226m in FY22)
  • Underlying EBITDA between $24m and $27m (vs $11.3m in FY22)
  • 5 new PSG centres and 2 new HBFD centres to be opened in FY23


Shaver Shop Group (ASX:SSG)

Established in 1986, Shaver Shop is a speciality retailer of male and female personal grooming products.

It runs 120 owned and franchised stores across Australia and New Zealand and an ecommerce platform.

Shaver Shop’s main product categories include electric shavers, clippers, trimmers, hair styling, female hair removal and men’s and women’s wet shave items.

Despite Covid disruptions, its total sales in FY22 were up 4.2% on FY21 to $222.7 million.

The company has made rapid inroad into the digital realm, with online sales now representing 34% of total sales.

Looking ahead, SSG says its FY23 priorities will be to expand its product range and brand portfolio, particularly in female categories.

It will also look to enhance brand awareness and economies of scale in New Zealand with the opening of new stores.

City Chic Collective (ASX:CCX)

CCX is a global omni-channel retailer specialising in plus-size women’s apparel, intimates, footwear and accessories.

It is a collective of customer-led brands including City Chic, Avenue, Evans, CCX, Hips & Curves and Fox & Royal.

The company’s Australia and New Zealand retail network presence comprises 12 premium flagship stores.

It also has a large geographic diversification, with 56.2% of revenue now coming from the Northern Hemisphere where it provides 8,000 styles for over 15,000 brands.

In FY22, CCX notched up $369m in sales for an underlying NPAT of $28.5m.

Looking ahead in FY23, CCY is targeting a closing inventory of $125m to $135m at 30 June 2023 as supply chain normalises.


Share prices today: