Armah Sports CEO on Fitness IPOs

In November 2020, HCM interviewed Fahad Alhagbani, CEO of Armah Sports, about founding the company and his experience with the Saudi operator Fitness Time.

At that time, Armah Sports was preparing to launch its first B_Fit and Optimo clubs, described by Alhagbani as "business class" and "first class," with the goal of creating fully smart gyms.

Fast forward to 2024, and Armah Sports has opened 12 clubs—three Optimo and nine B_Fit—with plans for two more Optimo and seven B_Fit clubs by 2025–26.

Notably, the company completed a successful IPO, Alhagbani’s second in five years, following the public listing of Fitness Time in 2018.

With Alhagbani scheduled to speak at the inaugural HCM Summit on October 24, it seemed timely to update on developments at Armah Sports.

Business Performance

Both Optimo and B_Fit clubs are thriving. The Optimo clubs reached full capacity in late July, now maintaining a waitlist with hundreds of potential members.

To ensure a quality experience, membership numbers are capped, which might affect short-term sales but maintains service standards, enhancing brand value.

The B_Fit clubs have taken a different approach by eliminating shorter membership options, now offering only six- and 12-month memberships.

Despite being relatively new (the first club opened two-and-a-half years ago), the business ended 2023 above break-even with six operational clubs.

Profits in the first half of 2024 exceeded expectations, approaching £2m with 12 clubs open, a significant improvement compared to a £1.5m loss in the same period in 2023.

These results mark a major step toward achieving long-term stability and growth, in line with promises made to investors.

Armah Sports IPO

In response to a robust Saudi stock market two-and-a-half years ago, Armah Sports pursued an IPO to raise capital for growth within the market.

The Saudi Capital Market Authority encourages family businesses to go public, but uncertainty surrounded whether a young company could do so.

The IPO aimed to foster growth under a strong governance framework, benefiting from having 11 siblings as shareholders, ensuring business continuity for future generations.

Following guidance from Saudi Fransi Capital, who facilitated Fitness Time’s IPO in 2018, the process took 22 months, requiring proof of concept and a clear five-year plan.

Despite the challenges, discussions during this period refined their strategy and performance.

The IPO launched on the parallel market in November 2023 with shares initially priced at £5.80, rising to around £19.00–£20.00, achieving a market cap comparable to Fitness Time’s after 13 years of trading.

This success, including winning "Best IPO of the Year 2023" at the Saudi Capital Market Awards, is credited to the entire team, from consultants to the Armah team driving both the IPO and club expansions.

The next aim is to list Armah Sports on the primary stock market within two years.

Growth Strategy

Armah Sports intends to continue its current strategy, opening two new B_Fit clubs in 2025 and seven clubs (two Optimo and five B_Fit) in 2026.

While initially focusing on Riyadh and Jeddah, they are exploring opportunities in Mecca and Medina for 2026–27.

Their strategy emphasizes prime locations in Saudi Arabia’s major cities, opting for quality over quantity, with plans to slow growth after reaching 30 clubs.

The first 12 clubs and headquarters were built using proceeds from the 2018 IPO, eliminating the need for landlords and securing favorable terms with banks.

Future expansion will follow an asset-light model preferred by investors.

Partnership with Real Estate

A partnership with the publicly listed Banan real estate company involves them purchasing land, building, and fitting out clubs to Armah’s specifications.

Armah will provide equipment and operate the clubs, sharing in the profits. Six clubs are already in the works, set to open in 2027, supplementing existing expansion plans.

Saudi Arabia’s growing market attracts international interest, but Armah Sports sees no need for overseas expansion yet. With the market poised to double in size again in the near future, diversification opportunities are already being considered.

Club Facilities and Brand Expression

Armah Sports focuses on integrating brand personality and communication to connect with members, beyond just facilities.

Optimo offers a hotel-like experience, while B_Fit is more avant-garde, with their unique personalities reflected in both environment and member interactions.

Mental Health Initiatives

Armah Sports partners with UK-based Minderful to provide mental health awareness sessions for members and staff in English and Arabic, focusing on education and awareness rather than treatment.

Future Brand Launches

Two new brands are in development, one named BYLD and another unnamed, with future launches dependent on market readiness and positioning.

While observing progress in the low-cost segment, Armah Sports maintains its focus on Optimo and B_Fit.

The Alhagbani family’s legacy in Saudi Arabia’s fitness market, from founding Bodymasters to creating Fitness Time and Armah Sports, provides a competitive advantage through market knowledge and continuous improvement.

Do you worry about growing competition?

I used to be concerned about it, but now we just concentrate on our own work. We operate in a different category.

Naturally, we monitor the market to understand what our competitors are up to, but we're confident in our ability to consistently find ways to distinguish ourselves and strengthen our competitive edge.

The Saudi fitness market is large enough to accommodate many successful players. Therefore, we view competition as a positive force that maintains momentum and contributes to the overall success of the market.

Tell us about your smart club model.

Abdulmohsen and I had already launched over 100 Fitness Time locations when we founded Armah Sports, so we aimed to create something different rather than repeating ourselves, thus setting ourselves apart in the market.

Our vision was to create the world’s first smart clubs, initially inspired by discussions within my supportive REX Roundtable community.

Previously, we prioritized growth and the fitness aspect of our clubs over technology, which was arguably our weakest point.

This time, we developed the technological infrastructure first and then constructed our clubs on top of it – building the foundation and integrating everything else into that ecosystem.

For instance, we have a superb building management system focused on energy optimization.

It oversees our air conditioning, water usage, pool temperatures, and more, making our buildings more eco-friendly. This is why we received LEED certifications for both Optimo and B_Fit.

We’ve also gone entirely paperless across the Armah Sports business, with all systems seamlessly communicating with each other.

Club access is via facial recognition, and soon members will be able to use Amazon Alexa voice technology to book classes, inquire about trainers, and schedule personal training sessions.

At Optimo and B_Fit, our Innovation Labs pilot technologies like VR and AR for members to try and for us to assess – we even anticipated electric vehicles (EVs) before they became common in Saudi Arabia, installing charging stations at our clubs.

Our ecosystem also includes smartwatch connectivity with apps and equipment, though that's not new for the fitness industry.

This is an ongoing journey, continuously pushing boundaries to make our clubs as intelligent as possible.

We see ourselves as a tech company, not just a fitness provider, and are open to adopting any technology that optimizes operations and enhances the member experience.

However, it must be practical—adopting too much technology can complicate things for both you and your members. It's important to know where to draw the line.

Are you using AI?

The fitness sector is slow to adopt technology, which allows us time to observe and stay aware of upcoming trends. This is our strategy concerning AI.

Nonetheless, machine learning is already integrated into our club software, generating substantial data.

We aim to use this data to inform our business decisions and precisely target our marketing efforts. Thus, building our data analytics framework is a primary focus at the moment.

What’s your vision as a company?

For the past 30 years and continuing today, our vision and motivation have been to positively impact the community and Saudi lifestyle.

This is a significant commitment for our entire family and serves as the emotional purpose that drives us forward.

In Saudi Arabia, 65% of the population is under 35. We aim to unlock the human potential of our country by promoting fitness to help them lead healthier lives.

Source: healthclubmanagement

The opinions shared in the GymNation blog articles are solely those of the respective authors and may not represent the perspectives of GymNation or any member of the GymNation team.