REG - Gym Group PLC (The) - Trading Update

GYMAnnouncement

09/11/2022 07:01

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221109:nRSI7470Fa&default-theme=true

RNS Number : 7470F  Gym Group PLC (The)  09 November 2022

9 November 2022

The Gym Group plc

 

Trading Update

 

RESILIENT PERFORMANCE WITH FURTHER MEMBERSHIP AND YIELD GROWTH

 

The Gym Group plc, ('The Gym Group', or 'the Company') the nationwide operator
of 224(1) low cost, high quality, 24/7 gyms, announces the following trading
update for the four months ended 31st October 2022.

 

Key highlights

 •    Membership increased through the period, reaching 838,000 at 31st October
      2022, an increase of 16.7% from the end of last year (Dec 2021: 718,000)
 •    Revenue for the ten months ended 31st October 2022 was £143.2m, up 78% versus
      the prior year (10 months October 2021: £80.5m)
 •    Like for like revenue in the majority of the pre-Covid mature estate (sites
      open up to end of 2018) was 93% in October 2022 compared to October 2019;
      however, performance in 16 workforce-dependent sites continues to be
      significantly impacted by changes in working practices
 •    The Company remains on track to achieve its target of 28 new openings in 2022
      and 25-30 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 2022 was £68.5m. The
      Company intends to remain within its stated guidance of 1.5-2.0x Non-Property
      Net Debt : Group Adjusted EBITDA Less Normalised Rent
 •    We continue to manage our utility and other costs carefully.  Energy volumes
      are 63% hedged until the end of 2023

 

Business performance

The business has continued to make good progress against its long-term
strategy.  Performance in 138 of our 154(2) mature sites has been encouraging
and the 47 new gyms opened between 2019 and 2021 and the 23(3) gyms opened in
2022 are maturing well, in line with expectations. However, as has been well
publicised, there has been a structural shift in working patterns which has
impacted the performance of 16 workforce-dependent sites.

 

Like for like revenue in the pre-Covid mature estate of 138 sites was broadly
back in line with pre-Covid levels in October (at 93%) compared to the same
period in 2019. Performance in the 16 workforce-dependent sites however, was
significantly below these levels. Total like for like revenue in the pre-Covid
mature estate as a whole was at 90% compared to the same period in 2019.

 

Value will always be a core aspect of The Gym Group's market leading customer
proposition, and we are the lowest cost, nationwide 24/7 gym operator.  Good
progress has been made regarding our yield management strategy.  We continued
to increase yields in the four months to October with Average Revenue per
Member per Month ('ARPMM') of £18.49, up from the comparable period last year
by 5.5%.  We have also continued to enhance our premium price membership
product - 'Live It' - and are pleased to see a positive response from our
members.  Take-up of the 'Live It' product increased to 29.8% of our
membership (June 2022: 28.7%).

 

During the period, we completed the rebranding of The Gym Group. The new
branding has been rolled out across the estate and the Company's digital
assets.  This rebranding was accompanied by a new creative campaign ('Gym
Face') which has been deployed across all media channels during the Autumn
campaign. We are pleased and encouraged by the feedback and positive response
to this important initiative.

 

The Company remains on track to deliver its rollout plan, targeting 28 new
openings in 2022 and 25-30 in 2023. To date, 23 new sites have been opened in
2022 (including three Fitness First sites acquired); and five additional new
sites are on track to open before the end of the year. We continue to see
opportunities to take market share as disruption continues in the health and
fitness market and competitors exit.

 

The Company continues to maintain a tight control of costs and has driven
strong margins and cashflow in the four months ended 31st October 2022.
Looking forward, energy volumes are 100% hedged up to the end of Q1 2023;
overall 63% are hedged for 2023 and our current expectation is that utility
costs will rise by £8-10m in 2023 compared to 2022. Despite these headwinds,
the Board remains excited about the market opportunities ahead and The Gym
Group's ability to capitalise upon them.

 

Richard Darwin, CEO of The Gym Group, commented:

"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.

 

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.

 

We are cognisant of the macro environment and continue to monitor developments
very 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."

 

***

 

A conference call for analysts and investors will be hosted by Richard Darwin,
Chief Executive, and Luke Tait, Chief Financial Officer, at 09:00am today to
discuss this statement. Please contact thegymgroup@tulchangroup.com if you
would like to attend.

 

For further information, please contact:

 

The Gym Group:

Richard Darwin, Chief Executive
 
via Tulchan Communications

Luke Tait, Chief Financial Officer

 

Tulchan Communications
 
+44 (0) 207 353 4200

James Macey White

Elizabeth Snow

Laura Marshall

 

Market abuse regulation information:

The information contained in this announcement is deemed by the Company to
constitute inside information as stipulated under the UK version of the Market
Abuse Regulation (EU) No. 596/2014 as it forms part of UK law by virtue of the
European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in the public
domain.  Katy Tucker, Company Secretary, is responsible for the release of
this announcement for the purposes of such regulation.

1 Sites as at 7th November 2022 - 202 at the start of the year with 20 organic
openings, three Fitness First sites acquired and one closure

2 Net of one closure in the year

3 Includes the three Fitness First sites acquired

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFSAFAAEESEEF