HARBIN, China, March 1, 2011 /PRNewswire-Asia-FirstCall/ -- SOKO Fitness & Spa Group, Inc. (OTC Bulletin Board: SOKF) ("SOKO"), an operator of fitness centers, beauty salons and spas in China, today announced that it has added a total of eight new facilities to its portfolio of majority and minority owned operations during the third quarter of fiscal 2011, ending February 28, 2011.
During the quarter:
- SOKO opened four new wholly owned facilities, including two beauty salons in Hangzhou, Zhejiang Province, a fitness center in Harbin, Heilongjiang Province and its third beauty salon in Shenyang, Liaoning Province;
- SOKO has acquired minority interests in and signed management agreements to operate four additional facilities, including a beauty salon in Harbin and a yoga center in Zhengzhou, Henan Province, each in which SOKO holds a 10% minority interest, and two fitness centers in Hangzhou, each in which SOKO holds an approximately 40% minority interest.
"We have made significant progress toward the execution of our growth strategy, adding eight new facilities to our portfolio in the third quarter and a total of twelve during the first nine months of the fiscal year. We are entering the fourth quarter well positioned to achieve our goal of opening 16 new facilities during the fiscal year through construction, acquisition of majority or minority interest or management agreements," said Tong Liu, Chief Executive Officer of SOKO.
"Hangzhou and Zhengzhou are the second and third new cities in which we have established a presence this fiscal year, and these new operations expand our geographic footprint to include strategic markets in Eastern and Central China. We believe we can attract a large number of customers and quickly establish our brand by building a presence in these regions similar to that which we have developed in our core markets in Northeastern China" continued Mr. Liu.
The four facilities in Hangzhou occupy space in a centrally-located office complex and a luxury residential facility. Consistent with SOKO's approach in Harbin and Shenyang, each location will house one fitness center and one beauty salon, enabling SOKO to cross-sell its fitness and aesthetic services to customers in this new market and more quickly build its brand.
Additionally, SOKO has entered the Central China market through a management agreement to operate its first facility in Zhengzhou, Henan Province, located in a centrally located, high-traffic commercial area. With an urban population of approximately 7.5 million, Zhengzhou has a large and growing middle-class, which SOKO believes will be receptive to its high-end fitness and beauty services as they are rolled out.
In addition to entering these new cities, SOKO continued to expand its presence in its core markets of Harbin and Shenyang in Northeastern China, with the opening of its third fitness center in Harbin, and beauty salons in both Harbin and Shenyang.
Under its management agreement model, which SOKO introduced in the first quarter of fiscal 2011, SOKO acquires a minority interest in a targeted facility and assumes the facility's operations in exchange for a management service fee equal to 6% of the facility's gross cash sales (net of tax). In each case (except for the two fitness centers in Hangzhou), SOKO also entered into shareholders agreements with other shareholders in these facilities which contain options that if exercised would permit SOKO to acquire a 100% ownership of such facility. SOKO's management believes that this approach creates the potential to significantly reduces the risk associated with entering new markets, as it eliminates the significant upfront investment associated with the opening of a new facility, allowing SOKO to gradually build its brand in these markets and develop the quality of service provided at these locations to a level consistent with SOKO's wholly- and majority-owned fitness, spa and salon facilities in Harbin, Shenyang and Beijing.
Including these new facilities, SOKO currently operates a total of 32 facilities (including one beauty school); 21 of these facilities are wholly owned, six are majority owned, and five are minority owned, and operated by SOKO under management agreements.
About SOKO Fitness & Spa Group, Inc.
SOKO Fitness & Spa Group, Inc., an OTCBB listed company (SOKF.OB), is an operator of fitness centers and beauty salons and spas in key cities in China. SOKO provides programs, services, and products combined with exercise, education, and nutrition to help their members lead a healthy life and achieve their fitness goals. For further information, please go to http://www.sokofitness.com.
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Cautionary Note Regarding Forward Looking Statements
This press release and the statements of representatives of SOKO Fitness & Spa Group, Inc. (the "Company") related thereto contain, or may contain, statements that are not historical facts and are therefore "forward-looking statements". Such forward-looking statements involve significant risks and uncertainties. Such statements may include, without limitation, statements with respect to the Company's plans, objectives, projections, beliefs, expectations and intentions and other statements identified by words such as "projects," "may," "could," "would," "should," "believe," "expect," "anticipate," "estimate," "intend," "plan," or similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties, including those detailed in the Company's filings with the Securities and Exchange Commission. Actual results, including, without limitation, results of operations from the new facilities announced herein and results regarding the Company's service offerings, client, membership and customer figures, proposed new center openings and prospects and strategies for growth, may differ significantly from those set forth in the forward-looking statements. These forward-looking statements involve certain risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control). The Company does not undertake any obligation to update any forward- looking statement, except as required under applicable law.
The Piacente Group, Inc.
Brandi Floberg or Lee Roth
SOKO Fitness & Spa Group, Inc.
SOKO Fitness & Spa Group, Inc.
Tel: +86-451-8770 2280
SOURCE Soko Fitness & Spa Group, Inc.