Work-from-home still impacting Gym Group as revenues rise

Low-cost fitness centre operator The Gym Group said in an update on Wednesday that its membership had increased 16.7% from the end of 2021, reaching 838,000 at the end of October, although a number of its facilities were still struggling in the post-pandemic work-from-home environment.

The London-listed firm said revenue for the 10 months ended 31 October was up 78% year-on-year at £143.2m.

Like-for-like revenue in the majority of the pre-Covid mature estate - sites open up to the end of 2018 - was 93% in October this year when compared to 2019, although performance in 16 workforce-dependent sites continued to be “significantly impacted” by changes in working practices.

The company said it remained on track to achieve its target of 28 new openings in 2022, and between 25 and 30 new openings in 2023.

Following tight cost control, leading to strong margins and cash flow in the period, non-property net debt at the end of October totalled £68.5m.

The firm said it intended to remain within its stated guidance of 1.5 to 2.0x non-property net debt-to-group adjusted EBITDA less normalised rent.

Its board said it was continuing to manage its utility and other costs “carefully”, with energy volumes 63% hedged until the end of 2023.

“Against an uncertain backdrop, we are pleased to see memberships continuing to build over the last four months demonstrating that people are prioritising their physical and mental health - and that gyms are an important part of the local community,” said chief executive officer Richard Darwin.

“Working patterns have continued to evolve post the pandemic and while performance of our 16 workforce-dependent sites is disappointing, the rest of the estate continues to recover well and demonstrate the resilience of our business model.

“Having delivered on the most ambitious rollout programme in our history to date, we are encouraged by the momentum in the pipeline for new gyms next year and believe that there is considerable scope for further growth.”

Darwin said the company was “cognisant” of the macroeconomic environment, and was monitoring developments carefully.

“However, the board remains very confident in the long-term opportunities for The Gym Group - our value proposition has always been a competitive advantage and we believe that in the current consumer environment, our high quality, affordable offer will be even more compelling and attractive.”

At 1211 GMT, shares in The Gym Group were down 11.85% at 108.95p.

Reporting by Josh White for Sharecast.com.