Shares in low cost, no contract gym operator Gym Group (GYM:AIM) gained 5% to 297.5p on Thursday after reporting a resilient first half to 30 June and confirming stronger than expected post reopening trading.
The company lost over half the trading days in the first six months due to Covid-19 restrictions, resulting in revenues falling 21.4% to £29.3 million compared with 2020.
Adjusted EBITDA (earnings before interest, taxes, depreciation, and amortisation) less normalised rent was a negative £8.1 million compared with a loss of £8.2 million in the same period last year.
PERFORMANCE STEP-UP
Since reopening all gyms the company has experienced a strong rebound in membership which is up a third from the lockdown lows to 730,000 at the end of June, representing around 91% of pre-Covid-19 levels.
Encouragingly Gym Group has seen an increase in frequency of visits per customer and higher customer satisfaction scores relative to pre-pandemic levels, testament to the company’s investment in the business and improved proposition.
The average price for a standard membership increased 1.6% to £19.11 per month while the penetration of the premium membership increased to almost 25% from 22.5% in December.
ACCELERATED EXPANSION
The company raised £30.1 million on 2 July 2021 to accelerate the expansion of the estate to exploit the opportunity created by the pandemic and confirmed today that it plans to open 40 sites over the next 18 months.
Prior to the pandemic the company was opening between 15-and-20 sites a year.
The pandemic has squeezed mid-market and premium operators while the company also noted that around 20% of local authority owned sites remained closed.
Meanwhile the firm said that the property market landscape was the most attractive seen in 12 years as the pandemic ravaged the high street and retailers moved online.
The company said it had been offered high quality sites, particularly on retail parks on acceptable commercial rents, building a pipeline of 80 new sites. Gym Group evaluates new sites against a 30% plus return on invested capital threshold.
Management believes there is an opportunity for the UK low cost gym market to double in size from the current 749 sites over coming years.
