Sport Clubs to open 16 new clubs by 2027-end with SAR 300M investments

Sport Clubs Co.’s CEO Wael El Merhabi expects the company to open three new clubs in Q4 2026 and an additional 13 clubs in 2027, as part of an expansion and development plan involving investments of approximately SAR 300 million.
 

In comments to Argaam, El-Merhabi explained that the plan also includes fully renovating three existing clubs and converting them to the new identity model, in addition to carrying out partial renovations at six other clubs.
 

The expansion will be financed through operating cash flows and bank facilities, supporting the company's growth plans while maintaining financial and investment discipline, he added.
 

The company had 63 operating clubs at the end of Q3 2026, while its development pipeline comprised 17 clubs, including 11 under construction and six in the design and licensing stages.
 

New clubs typically reach operational break-even within a few months. A large number of recently opened clubs have already started generating operating profits from day one, benefiting from membership sales ahead of their opening, according to the top executive.
 

He said the 39.1% increase in Q3 2026 profit to SAR 22.7 million, compared with revenue growth of 20.1%, reflected improved operational efficiency and the evolution of its business model.
 

Performance was driven by membership growth, a higher contribution from new clubs, improved performance at existing clubs, and positive results from older clubs following their renovation and conversion to the new identity model, he added.
 

El-Merhabi expects positive momentum to continue in Q4 2026, supported by membership sales and a membership base of nearly 200,000 at the end of September 2026, as well as improved performance across existing and new clubs and additional services.

Interview Details
 

* Sport Clubs' profit rose by 39.1% to SAR 22.7 million in Q3 2026, compared with revenue growth of 20.1%. What were the main factors behind profit growth outpacing revenue growth?

-Profit growth exceeding revenue growth reflects the development of Sport Clubs' business model and improved operational efficiency, supported by membership growth, a higher contribution from new clubs, improved performance at existing clubs, and the strong growth achieved by older clubs after their renovation and conversion to the new identity model.
 

The company draws on a legacy spanning more than three decades in the Saudi market, supported by the accumulated experience of its management team, which has been managing and developing the business for more than 13 years. This combination of in-depth market knowledge and operational experience has enabled us to understand members' needs and evolving expectations and identify the operating and investment models best suited to the Saudi market.
 

One of the key factors supporting profitability is the success of the new club identity model. This goes beyond updating appearances and represents a comprehensive upgrade of the operating model, including better space allocation, the selection of high-quality sports equipment, and improvements to services and the member experience. These changes enhance investment efficiency and utilization of operating capacity.
 

The experience of converting existing clubs to this model has consistently proved successful. All clubs that underwent the transformation, without exception, recorded significant growth in commercial performance and improved operating margins after reopening. In some cases, growth reached triple-digit rates compared with their previous performance levels.
 

The company achieved this revenue and profit growth despite the temporary closure of three clubs during 2026 to carry out comprehensive renovations, each taking at least 90 days. This demonstrates the strength of operating performance and the company's ability to grow despite the temporary impact of these closures on revenue. These renovations form part of a strategy to improve the efficiency of existing assets and enhance their long-term profitability.
 

We are also working to realign our club portfolio by gradually moving away from certain economy club models (Express category) that no longer meet our operating and investment standards, and converting suitable locations to the upgraded model.

This supports a better portfolio mix and stronger long-term profitability.
 

Growth in subscription and service revenue, together with improved absorption of fixed costs, also supported the financial results. The year-on-year comparison additionally benefited from the non-recurrence of certain exceptional expenses related to the company's stock market listing in the corresponding period.
 

What distinguishes these results, in our view, is that they are not driven solely by adding more clubs, but also by improving the productivity of existing assets, enhancing the economics of new clubs, and continuously increasing the efficiency of the operating model.

* Active membership increased by 19.6% to approximately 200,000 at the end of September 2026. How do you assess demand for fitness subscriptions?

-We believe demand for fitness services in the Kingdom continues to show positive growth indicators, driven by greater awareness of the importance of exercise and a healthy lifestyle, evolving lifestyles, and increased interest in physical activity across different age groups. This is supported by the objectives and initiatives of Saudi Vision 2030 to promote sports participation, increase physical activity, and develop the sports sector and quality of life.
 

Based on our knowledge of the Saudi market, we believe the largest consumer segment is looking for a balance between service quality, comprehensive facilities and services, and affordable pricing. This is what we seek to offer through our Body Masters and Body Motions brands.
 

Our aim is neither to compete on the lowest price nor to offer a high-cost model serving a limited segment. Instead, we seek to provide a high-quality fitness experience, supported by advanced equipment, comprehensive facilities and services, while maintaining accessible pricing that makes fitness available to a broad segment of society.
 

We also view membership growth as more than simply attracting new subscribers. We are increasingly focused on strengthening members' engagement with their clubs and encouraging them to maintain regular exercise routines.
 

To this end, we invest in improving the member experience through operational, marketing, and digital initiatives covering every stage of the member journey, from subscription and engagement to service utilization, renewal, and retention.
 

Our digital ecosystem and customer relationship management systems provide a better understanding of members' needs and usage patterns, allowing us to develop more relevant communications, increase engagement, and reduce gaps between subscriptions.
 

We believe that building an ongoing relationship with members, rather than simply completing a sale, is one of the most important factors in sustaining revenue and increasing the long-term value of membership.

* The company had 63 operating clubs at the end of Q3 2026, while its development pipeline includes 17 clubs. How many clubs do you expect to open in Q4 2026 and 2027, and how much investment has been allocated to these expansions?

-Sport Clubs' expansion strategy is based on a proven business model and years of accumulated execution and operational experience in studying markets, selecting locations, and assessing investment and operational feasibility.
 

We believe the quality of expansion is just as important as its pace. Therefore, our goal is not simply to increase the number of clubs regardless of their expected performance. Instead, we focus on locations with sufficient demand, sustainable growth opportunities, and the potential to achieve targeted investment returns.
 

Our studies assess population density, demographic characteristics, competition levels, and purchasing power, in addition to the distribution and coverage areas of our existing clubs. This is intended to minimize overlap between club catchment areas, avoid shifting members from existing clubs to new ones, and maximize incremental growth across the network.
 

Our experience in the Saudi market has helped us identify the operating models best suited to consumer needs and focus on expanding those models, while avoiding other business formats that our feasibility studies or operating experience have shown do not meet our investment criteria.
 

Our established brands and longstanding market presence also support our ability to introduce new clubs and build membership bases during the pre-opening and initial operating stages.
 

At the end of Q3 2026, the company had 63 operating clubs and 17 clubs in its development pipeline, including 11 under construction and six in the design and licensing stages.
 

We expect to open three new clubs in Q4 2026 and an additional 13 clubs in 2027. This will be accompanied by a program to upgrade existing clubs, including comprehensive renovations of three clubs and their conversion to the new identity model, as well as partial renovations at six other clubs.
 

The investments required to implement this plan are estimated at approximately SAR 300 million. They will be financed through the company's operating cash flows and bank facilities, supporting its growth and development plans while maintaining financial and investment discipline.

* The women's fitness segment, Body Motions, recorded revenue growth of 32.6% in Q3, compared with 13.8% growth for the men's segment, Body Masters. What explains this difference, and does the company intend to accelerate expansion in women's clubs?

-The strong performance of the women's club segment reflects positive growth in demand for women's fitness services in the Kingdom, as well as Body Motions' success in strengthening its market presence and developing an experience tailored to the needs and expectations of this market segment.
 

During the first nine months of this year, three new Body Motions branches were opened, compared with only two Body Masters branches. In addition, three older Body Masters branches were temporarily closed for renovation and conversion to the new identity model. This contributed to the temporary difference in revenue growth between the women's and men's segments in Q3.
 

The different growth stages and business base sizes of the two brands should also be taken into account. Body Masters has a larger network and a more established revenue base, while Body Motions benefits from opportunities to expand, increase its reach, and grow its membership base.
 

At the same time, Body Masters continues to deliver positive growth, not only through new club openings but also by upgrading existing clubs and relaunching them under the new identity model.
 

The experience of converting existing clubs to the upgraded model has demonstrated its ability to deliver tangible improvements in commercial performance and operating margins. This makes the development of the existing network an important growth driver alongside geographic expansion.
 

It is important to emphasize that the company's strategy does not favor either brand over the other in terms of expansion. Both Body Masters and Body Motions are key pillars of the company's business and have equal strategic importance. Decisions on opening new clubs are based on local demand, investment opportunities, and the economic feasibility of each location, rather than the relative growth rates of each brand individually.
 

We apply the same principles across both brands regarding facility quality, efficient space allocation, equipment selection, and service development, while taking into account the different needs and preferences of each segment.
 

We continue to assess expansion opportunities in both women's and men's clubs based on local demand and investment feasibility, with a focus on building an integrated network that delivers growth without compromising the efficiency of existing clubs.

* How did club utilization rates and capacity develop in Q3 2026? What is the average time required for new clubs to reach operational break-even and their targeted operating profitability?

-The company continues to work on improving the utilization of its clubs' operating capacity, drawing on its management team's accumulated experience in understanding members' usage patterns and the distribution of demand across facilities and services.
 

Developing the club model has been a key focus in this regard. This has involved reassessing space allocation among different training areas, optimizing equipment selection and quantities, and upgrading facilities and services in line with actual usage and members' needs.
 

These improvements are intended not only to increase capacity but also to enhance the member experience and the club's operating efficiency.
 

As for the average time required to reach operational break-even, this typically takes no more than a few months, although the period varies depending on the location, investment size, and market characteristics. A large number of clubs opened recently have already started generating operating profits from day one, benefiting from the success of the pre-opening sales strategy, which enables us to build a membership base that generates substantial revenue from the first day of actual operations.
 

This highlights the importance of integrating location selection, the operating model, and commercial readiness ahead of opening to accelerate the achievement of targeted performance levels.
 

We focus on evaluating performance throughout a club's entire lifecycle, including revenue development, operating efficiency, and profitability, rather than looking solely at how quickly it reaches break-even.

* What are your expectations for the company's performance in Q4 2026?

-We entered Q4 on the back of positive performance in the first nine months of the year, a growing membership base, a high balance of deferred revenue, a clear expansion pipeline, and the results we have begun to see from developing the club model and improving operating efficiency.
 

Accordingly, we expect positive momentum to continue in Q4 2026 across key performance indicators, including revenue growth, subscriptions, membership, additional services, and profitability. This will be supported by the performance of existing and new clubs, the results of upgraded clubs, and the continuation of commercial and operational initiatives.
 

We remain optimistic about the long-term growth fundamentals of the fitness sector in the Kingdom and Sport Clubs' ability to capitalize on these opportunities and strengthen its competitive position, supported by its established brands, management team's experience, and ongoing development of its business model.