Rising membership and prices lift Gym Group back to profit

Unlock the Editor’s Digest for free

Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.

Price increases and rising membership have helped Gym Group to record its first pre-tax profit for four years and prompted the budget gym operator to upgrade its full-year guidance.

The London-listed fitness group, which operates 240 gyms across the UK, on Wednesday reported pre-tax profits for the six months to June 30 of £200,000, compared with £6.1mn loss by the same measure last year. Revenues were up 12 per cent, to £112mn.

The company has reported pre-tax losses for each six-month period since coronavirus shutdowns first affected its business in the first half of 2020.

The shares were up 7.9 per cent at lunchtime on Wednesday in London, at 155p, although they remain well below the 308p level reached in January 2020.

The company’s recovery comes amid widespread optimism that low-cost gyms are well placed to grow more quickly than the sector as a whole as they recover from a loss of members during the pandemic.

Chief executive Will Orr said he expected a prolonged upturn in demand for gyms and customer willingness to pay, despite cost-of-living pressures.

“I expect a period of at least a couple of years where we continue to be able to take the benefit of this yield opportunity,” Orr told the Financial Times.

Acknowledging that PureGym, its budget rival, had also raised prices, Orr said: “Everybody sees the same thing, which is that customers really perceive great value for money in the proposition. People value health and fitness so highly.”

Average monthly revenue per member for Gym Group increased 9 per cent compared with the first half last year, while the headline monthly membership price in June was £23.94, also 9 per cent up on the same month last year. The company had 905,000 members at the end of the first half, up 4 per cent from the same point last year.

The company said it expected like-for-like revenue growth of between 5 and 6 per cent for the full year, compared with the 4 to 5 per cent it predicted when last announcing results in March.

In a report in March, PwC said low-cost gyms had more than doubled their share of the private-sector gym market over the past decade and now accounted for 19 per cent of private-sector market value.

The number of clubs in low-cost gyms increased 4 per cent to 724 in the five years to 2023, whereas the number of other private gyms was broadly unchanged, at 3,736.

PureGym on Tuesday said it had made a bid for the majority of the assets of New York-based Blink Fitness at the base purchase price of $105mn in cash. Last month, Blink Fitness was put into Chapter 11 by owner Equinox, a luxury gym chain.

PureGym and Gym Group together account for about 80 per cent of all UK budget gyms.

Orr stressed that Gym Group would continue to grow organically rather than by acquisitions.