The Gym Group swings to profit as growth plan pays off

Budget fitness centre operator The Gym Group swung to a profit in the first half of 2024 and said it was “well set” to deliver full-year earnings at the top end of market forecasts.

The London-listed firm, which has 240 locations across Britain, reported a pretax profit of £0.2m for the six months, compared to a £6.1m loss during the same period in 2023.

The Gym Group’s revenue was 12 per cent higher than last year’s at £112.1m, and the number of members rose to 905,000 from 867,000.

The company raised its guidance for like-for-like revenue growth in 2024 to between five and six per cent, from a previous range of four to five per cent set out in March.

It said that following the half-year results and “continued encouraging trading throughout the summer,” the firm now expected full-year earnings to come in “at the top end of recently revised market expectations.”

The latest company-compiled analyst estimate range for The Gym Group’s earnings before interest, taxes, depreciation and amortisation (EBITDA) less normalised rent is between £42.4m and £44m.

After posting an £8.3m pretax loss for 2023 in March, The Gym Group launched a “Next Chapter” growth plan aiming to increase returns from its existing estate, accelerate the roll-out of new sites and find additional revenue streams.

The firm said on Wednesday that, after opening four new gyms over the six months, it had secured locations to deliver between 10 and 12 later this year and was on track for 15 to 20 new gyms in 2025.

“We have increased membership, revenue and profit, and our market-leading proposition is more resonant than ever, in a growing market,” said Will Orr, The Gym Group’s chief executive.

“We are also well on track to deliver our target of opening circa 50 new high-quality gyms over the next three years, funded from free cash flow.

“PwC estimates there’s going to be white space available for 700 more low cost gyms, so the scope is huge.

“We see with the likes of EasyJet that no thrills, value for money is where people are spending their money.

“That’s all underpinned by the fact that people are ever-more informed about the benefits of fitness, with social media contributing to people looking to do so.”