The Gym Group reveals positive full-year results and plans to roll out Hyrox

The Gym Group has announced its positive H1 trading trends have continued, with year end revenue up by 18 per cent and members by an average of 8 per cent.

In a results briefing, The Gym Group CEO, Will Orr, told HCM the company is well positioned for the coming year, saying: “We're seeing good growth and good momentum and will continue with our site roll outs. We opened six clubs in 2023 and this year plan to open 12.”

Expansion will be focused in areas of high residential density, such as Orpington and Bromley. There are no plans at present to take a smaller model into more rural areas.

Orr says the high-value, low-cost operator – which was originally founded in a recession – has good foundations and the model has proven resilient in the current economic climate. “There have been shocks in the system in the past year in terms of energy prices and inflation, but that has now normalised and it’s a more stable trading environment,” he says.

The revenue increase of 18 per cent for the year ending 31 December 2023 took the company to £204.0m (2022: £172.9m), while the average increase in members of 8 per cent saw numbers rise to a high of 872,000 in the year against 808,000 in 2022. Average revenue per member per month was up 9 per cent to £19.50 (2022: £17.82).

The year closed with 850,000 members compared with 821,000 at 31 December 2022, an increase of 4 per cent.

Net debt was £66.4m at 31 December 2023, down from £76.1m at 31 December 2022. Orr said the reduction reflects strong working capital performance and the timing of spend on new site openings and other capital expenditure projects.

With the recent launch of an off-peak membership starting at £13.99 a month, creating a three-tiered membership structure, Orr says The Gym Group is even more accessible, which will attract a new audience, although the company is currently offering its Ultimate membership for the price of a Standard, meaning that only two of the three tiers are being deployed at present.

Orr says the lower price point is particularly appealing to young people.

Membership figures were also boosted in September/October thanks to the student population – the company offers a Student Saver Membership – a nine-month contract that gives access to two gyms.

In terms of gym floor trends, while cardio is still an important part of the mix, Orr says there's an increasing interest in strength and conditioning and functional training, as well as Hyrox training to help prepare for the races.

“We’re the only low cost operator to offer Hyrox training. It’s available at 17 gyms currently and we will be rolling this out to 50 of our gyms, adding further value to our proposition,” he said.

The Gym Group has been sector-leading in terms of ESG, particularly in relation to sustainability. Going forward, Orr says this will continue to be an important focus. “It’s part of our DNA,” he explained. “Last year The Gym Group was the first gym chain in the world to get its net zero pathway approved by the Science Based Targets initiative and we were also the first to measure social value.”

The full year-end results will be released on 13 March when the future strategy will be unveiled. “These are strong foundations on which to build our next chapter of growth,” says Orr.

Feedback from investors has been positive, with shares rising 2.85 per cent on the publication of the results. Investec described it as a strong set of results with higher than expected revenues and lower debt in H2 and said the stock is “severely undervalued relative to company’s growth and ROIC potential.”

Barclays said: “No major surprises in pre-close update, but we believe implied stability in the forecast outlook is incrementally positive. The new management team appear to be putting its mark on the business with focus on price discipline rather than chasing volume.”