Fitness First up for sale

Fitness First has cut expansion plans

Shares in health club chain Fitness First jumped by nearly 12% on Wednesday after the firm effectively put itself up for sale.

The firm has been hit by increased competition and weak economic growth, and its share price has tumbled over the past few months.

Fitness First said private equity firms had recently expressed an interest, and so it had instructed its financial advisers "to investigate options to maximise shareholder value which could include an offer" for the firm.

But it added that no offers have been received yet.

Shares in Fitness First closed up 14 pence at 133.5p.

Profit warning

Last month Fitness First shocked investors when it warned that profits were set to undershoot analysts' forecasts by about 20%.

It blamed its problems on slower-than-expected membership growth, and added that its rapid expansion programme had stretched resources.

The firm has now reduced the number of new clubs it plans to open over the coming year from 80 to 50.

It has also cut costs and said it was "confident that the prospects for Fitness First for 2003 remains good".

Changing fortunes

Fitness First was one of several health club chains who sought to cash-in on the fitness boom during the 1990s.

The firm operates 311 gyms worldwide, with 144 in the UK and the remainder spread between mainland Europe, the far East, and Australia.

It is not the only health chain to suffer from the changing fortunes in the fitness sector.

In July, Esporta was taken over by a private equity firm, while an attempted merger between the upmarket health club Holmes Place and arch-rival Cannons fell apart last month.