Leejam expects to turn profitable in Q3 2020, restructures expansion plan: CEO

Leejam Sports Co. (Fitness Time) is expected to return to profitability in Q3 2020, based on the current recovery of its club performance, CEO Justin Musgrove told Argaam in an exclusive telephone interview on Thursday. 

“We have opened two clubs in Q1 2020. After the closure, we have restructured our expansion plan. Instead of having 15 new clubs, we are aiming to have about nine to ten clubs. Two have already opened, seven to eight will be opened this year, while we moved the rest to 2021,” Musgrove said.  

“Furthermore, since the closure of our fitness centers, we have started maintenance projects in the current clubs to enhance the facilities and customer experience,” he added. 

As for the company’s expansion program, Leejam had bank facilities worth SAR 85 million for its working capital and other facilities of SAR 275 million as of June 30, 2020.  

Commenting on Q2 2020 performance, Musgrove said Leejam continued to incur some fixed and semi-variable expenses. Accordingly, it took some necessary measures to reduce the impact of this disruption to the business by reducing the cost of wages by over 40% during the period while being able to retain the majority of its overall team.  

Moreover, the company’s board of directors in collaboration with the audit committee took an initiative to reduce the remunerations of all directors & committee members by 50% for the first half of 2020.  
 

The company benefited from various government initiatives that targeted affected businesses. A 70% of Leejam’s Saudi employees were included in SANED program and the company’s GOSI contribution for those employees was waived.  

“Also, we benefited from the initiative to defer the electricity bills for three months with a 30% discount. Loans deferrals program was another initiative we benefited fromm which enabled us to postpone loan payments for 90 days and up to 180 days to other banks, in addition to the VAT and Zakat payment deferrals initiative,” Musgrove concluded.