Strengthening Profitability of the Sports Club Business

「In light of major changes in the business environment for sports clubs, the company decided to close 6 stores in urban locations with high rent burdens relative to revenue and limited prospects for recovery, as well as 1 store whose lease term had expired, and recognized all related closure costs at once. After carefully reviewing the recoverability of fixed assets held by the group in accordance with the accounting standard for impairment of fixed assets, the company recorded an impairment loss of ¥3.056 billion at a total of 38 facilities, including those being closed.」

「不採算店舗の退店や将来発生が見込まれる退店コストの低減を含めた早期対応として多額の損失を計上いたしました。」

「For the interim consolidated period, revenue was ¥31.702 billion, up 1.1% year on year; operating profit was ¥59 million, down 93.0%; ordinary loss was ¥348 million, a decline of ¥793 million from the year-earlier period; and interim net income attributable to owners of the parent was ¥24 million, down 88.6%.」

「The net increase in facilities from 4 new openings in the previous consolidated fiscal year, Sports Club & Sauna Spa Renaissance KSC Kanamachi 24, transferred to the company in March 2024, and Oasis-operated facilities contributed to sports club business revenue of ¥53.217 billion for the consolidated fiscal year, up 35.3% year on year. Membership was 500,126, including 68,398 online members, up 26.6%.」

「Revenue in the sports club business was ¥26.479 billion, up 38.0% year on year, and membership at the end of the interim consolidated period was 503,852, including 62,285 online members, up 28.9%. This was driven by 4 facilities newly opened in the previous consolidated fiscal year, Sports Club Renaissance KSC Kanamachi 24, which was transferred to the company in March 2024 and reopened after renovation in April, and an increase in Oasis membership.」

「During the cumulative third quarter, new sports club memberships remained sluggish, but revenue stayed close to plan due to the opening of a comprehensive sports club and the October revision of junior school membership prices, among other factors. Company-wide energy-saving measures and the government's electricity and gas price relief program kept utilities costs substantially below plan. As a result, revenue was ¥32.422 billion, up 7.0% year on year; operating profit was ¥1.055 billion, up 111.9%; and ordinary profit was ¥862 million, up 276.3%.」

「In the sports club business, new fitness memberships and total membership remained strong, supported by enrollment promotions tailored to demand for strength training, saunas and pools during the extremely hot weather. Membership at the end of the second quarter reached 390,918, including 45,620 online members, up 8.3% year on year. To address rising costs and increase added value through continued investment in personnel and facilities, we progressively revised fitness membership prices from July.」

「Although utilities costs remained elevated, company-wide energy-saving measures and the government's electricity and gas price relief program kept costs substantially below plan. As a result, for the cumulative first quarter, revenue was ¥10.385 billion, up 6.6% year on year; operating profit was ¥43 million, an improvement of ¥98 million; and ordinary profit was ¥39 million, an improvement of ¥102 million.」

「For the consolidated fiscal year, revenue was ¥40.760 billion, up 9.8% year on year; operating profit was ¥680 million, down 25.5%; ordinary profit was ¥311 million, down 50.8%; and the company recorded a net loss attributable to owners of the parent of ¥1.141 billion, compared with net income attributable to owners of the parent of ¥513 million in the previous fiscal year.」

「As a result, for the cumulative third quarter, revenue was ¥30.312 billion, up 10.2% year on year; operating profit was ¥498 million, down 31.4%; ordinary profit was ¥229 million, down 51.1%; and quarterly net income attributable to owners of the parent was ¥12 million, down 97.4%. These figures include approximately ¥400 million in opening costs for comprehensive sports clubs, including 2 facilities opened in August and 1 in November.」

「As a result, for the cumulative second quarter, revenue was ¥19.889 billion, up 12.7% year on year; operating profit was ¥96 million, up 89.5%; ordinary profit was ¥24 million, an improvement of ¥158 million and a return to profitability; and quarterly net income attributable to owners of the parent was ¥6 million, an improvement of ¥89 million and a return to profitability.」

「In the sports club business, new fitness memberships remained strong. As a result, membership at the end of the first quarter reached 342,981, including 21,173 online members, up 11.2% year on year and above plan. The small-group school-based fitness program launched in the previous consolidated fiscal year also attracted more customers than planned. Average membership fees also increased in June compared with the year-earlier period.」

「In addition to an increase in membership excluding members on leave from the previous fiscal year and a successive revision of member pricing that raised the average membership fee, we advanced structural reforms to improve profitability, including stronger IT-based initiatives to acquire and retain members, appropriate staffing, control of operating costs such as utilities, and bringing facility maintenance in-house. As a result, sports club business revenue increased 22.2% from the previous fiscal year, and revenue substantially exceeded that of the previous consolidated fiscal year.」

「Domestic facilities operated normally from June, while facilities in Vietnam progressively resumed operations from November with capacity restrictions. Following the lifting of the state of emergency in October, user numbers gradually recovered. Revenue was ¥27.505 billion, up 28.1% year on year; operating profit was ¥726 million, an improvement of ¥4.120 billion; ordinary profit was ¥468 million, an improvement of ¥4.118 billion; and quarterly net income attributable to owners of the parent was ¥485 million, an improvement of ¥3.974 billion.」

「From June, domestic facilities resumed normal operations with infection-control measures in place. Revenue was ¥17.650 billion, up 40.7% year on year, and operating profit was ¥51 million, an improvement of ¥2.967 billion year on year and a return to profitability. The ordinary loss was ¥133 million, an improvement of ¥2.932 billion, and the net loss attributable to owners of the parent was ¥83 million, an improvement of ¥2.981 billion.」

「In the sports club business, we worked to lower the break-even point and increase added value to restore earning power. The operating loss was ¥402 million, compared with an operating loss of ¥1.970 billion in the year-earlier period, and the ordinary loss was ¥496 million, compared with an ordinary loss of ¥2.041 billion. Results improved at a faster pace than initially expected.」

「For the consolidated fiscal year, the group's results were revenue of ¥30.209 billion, down 32.9% year on year; an operating loss of ¥4.602 billion, compared with operating profit of ¥3.267 billion; an ordinary loss of ¥4.902 billion, compared with ordinary profit of ¥3.042 billion; and a net loss attributable to owners of the parent of ¥8.705 billion, compared with net income attributable to owners of the parent of ¥1.378 billion.」

「Revenue was ¥12.546 billion, down 45.2% year on year. Due to the decline in revenue, the operating loss was ¥2.916 billion, compared with operating profit of ¥1.834 billion in the year-earlier period; the ordinary loss was ¥3.066 billion, compared with ordinary profit of ¥1.716 billion; and the net loss attributable to owners of the parent was ¥3.065 billion, compared with net income attributable to owners of the parent of ¥1.090 billion.」

「During the first quarter of the fiscal year, from 1 April to 30 June 2020, all facilities other than nursing care and rehabilitation facilities were closed progressively from 8 April in response to requests from local governments to suspend operations under the state of emergency declared by the government. As a result of the decline in new memberships and increases in cancellations and membership suspensions, revenue was ¥3.814 billion, down 65.6% year on year. The operating loss was ¥1.970 billion, the ordinary loss was ¥2.041 billion, and the net loss attributable to owners of the parent was ¥2.780 billion.」

「Operating profit was ¥3.267 billion, down 13.6% year on year, and ordinary profit was ¥3.042 billion, down 16.2%, due to the impact of the suspension of schools described above and lower membership revenue resulting from an increase in members taking leave.」

「From October, we introduced the following new services and programs to meet diverse needs: video program, Les Mills Virtual, at 89 facilities; body make program 2ndBody at 34 facilities; and the member app My Renaissance at all facilities.」

「We also renovated 30 facilities to improve their environment and appeal. In addition, membership and sales at clubs opened in recent years, including Renaissance Rycom, which opened in the previous consolidated fiscal year, remained strong, and overall revenue in the sports club business progressed steadily.」

「In the sports club business, we actively implemented membership acquisition initiatives using digital solutions, including analysis of customer data and related communications. Membership reached 413,472, up 1.5% year on year.」

「In the sports club business, we made active capital investments, including new openings and facility renovations, to achieve sustainable growth. Membership at company-operated sports clubs reached 411,466, up 1.2% year on year.」

「Regarding sports club openings, Sports Club Renaissance Fukushima opened in April. In November, Sports Club Renaissance Oita was relocated and reopened as Sports Club Renaissance Oita, and Sports Club Renaissance Rycom, the company's first facility in Okinawa Prefecture, also opened. The 4 facilities opened in the previous consolidated fiscal year, including Sports Club Renaissance Kitasenju, have generally performed in line with the initial plan. We also renovated 29 facilities to improve their environment and appeal.」

「To strengthen competitiveness in the fitness division, we are working to extend operating hours, including 24-hour operations, renovate facilities and introduce new programs. 24-hour operations had been introduced at 7 facilities by September and were scheduled to expand to 11 facilities in November. We renovated studios at 22 facilities to improve the facility environment and appeal, and rolled out programs popular with younger customers, including hot yoga and Dark Workout.」

「At existing sports clubs, we renovated 12 facilities to meet the diverse needs of local customers. We piloted 24-hour operations at Sports Club & Spa Renaissance Kunitachi 24 in March 2018, then expanded them from June to Sports Club Lite! Renaissance Yokohama 24 and Sports Club & Spa Renaissance Konan-Chuo 24.」

「Membership remained strong, partly as a result of the 4 new stores and renovations at existing facilities, and membership at company-operated sports clubs reached 406,642, up 1.8% year on year. In addition, 24-hour operations began at some sports club facilities from March to meet diverse customer needs.」

「Our group is making active capital investments to achieve sustainable growth. During the 9-month period ended 31 December, Renaissance Kitasenju, a large-scale comprehensive sports club in Adachi-ku, Tokyo, opened in April; Cocor Renaissance Nagoya JR Gate Tower, a new urban fitness club brand, opened in May in Nakamura-ku, Nagoya; and Renaissance Fukuoka Ohashi reopened in August following reconstruction in Minami-ku, Fukuoka. In October, Renaissance Ryugasaki New Town opened under an operating services agreement in Ryugasaki, Ibaraki. At existing stores, we renovated 27 facilities. We also invested in equipment for hot yoga programs in the studios and worked to improve the facility environment and competitiveness.」

「At existing stores, we renovated 23 facilities. We also invested in equipment for hot studios and worked to improve the facility environment and appeal, including the introduction of hot yoga and other programs from April. Membership at the 3 new stores remained strong, and membership also increased at renovated facilities. As a result, total membership across the company reached 416,346, up 2.0% year on year.」

「At existing clubs, we renovated 11 facilities. We also invested in equipment for hot yoga programs in the studios and worked to improve the facility environment and appeal, including the full-scale rollout of hot yoga programs from April.」

「We offer a wide range of group exercises tailored to members' objectives, designed to be easy, enjoyable and effective and to keep members engaged. At our gyms, we also introduced tablets at all clubs that allow staff to check the training histories of visiting members in real time, thereby providing effective support for members' training. Since April 2017, the service has been rolled out progressively at tennis schools nationwide.」

「In the sports club business, membership at existing clubs, defined as clubs that can be compared on a like-for-like basis excluding new openings and closures, increased 1.6% year on year in the fitness division and 4.7% in the schools division, for a total increase of 2.8%. In October, the company introduced Slize Training and Slize Stretch, which use hexagonal, plate-shaped tools called Slizes in the functional training areas of its gyms. By sliding the tools during training and stretching, users can improve strength and flexibility. Yoga Stretch and Training Yoga were also introduced. The company also used the Smart Tennis Sensor, developed by Sony Corporation, in event lessons at its tennis schools. The sensor analyzes a user's shots simply by attaching it to a tennis racket. The company plans to launch Smart Tennis Lessons using this system at Renaissance tennis schools nationwide.」

「Membership at existing clubs, defined as clubs that can be compared on a like-for-like basis excluding new openings and closures, increased 1.9% year on year in the fitness division and 4.3% in the schools division, for a total increase of 2.8%. In April, the company introduced Group Fight, a studio program combining mixed martial arts movements with dynamic music to promote fitness and relieve stress, under the theme “Anyone can do it and enjoy it.”」

「Membership at existing clubs increased 2.3% year on year in the fitness division and 4.5% in the schools division, for a total increase of 3.1%. In April, the company introduced Group Fight, a studio program combining mixed martial arts movements with energetic music to promote fitness and relieve stress, under the theme “Anyone can do it and enjoy it.” From May, the company introduced the Smart Tennis Sensor at tennis schools nationwide and held special event lessons. The sensor analyzes a user's shots simply by attaching it to a racket.」

「① Improving profitability in the sports club business」