Premium memberships provide Gym Group with profit boost as it prepares to launch small-box model
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Premium memberships provide Gym Group with profit boost as it prepares to launch small-box model

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We opened more new sites in the first half of the year than in any other first-half period in the past three years

The Gym Group has attributed strong growth in revenues and profits on a pipeline of new openings and the success of its 'Live It' premium membership model.

The group reported revenues of £74.0m for the first six months of 2019, an increase of 26.9 per cent compared to the first half of 2018. The increase resulted in pre-tax profits of £7.1m – up 53.3 per cent from 2018.

During the period, the company opened eight new gyms and completed the integration of the easyGym sites – which it acquired in 2018 – into its estate. The group now operates 165 sites across the UK.

"This has been a strong first half for us and that is reflected in the revenue growth and an increase in profits," said Richard Darwin, CEO.

"We opened more new sites in the first half of the year than in any other first-half period in the past three years. We've also completed the integration of the easyGym sites into our estate, so all those sites are now operated under The Gym brand."

Darwin added that the Live It model had played a major part in revenue growth.

The premium membership option was introduced 18 months ago and offers three benefits: multi-site access – which enables members to choose up to five gyms they can use regularly – the option of bringing a friend to the gym and the use of FitQuest measurement machines.

Live It is offered to existing members as a £5 add-on and has now been rolled out across the entire estate.

"The yield per member was up 5.6 per cent to £15.47 per member – and that is very much on the back on the growth we've seen in Live It, which has now been taken up by 16.9 of our total membership," Darwin said.

Looking forward, the company is preparing to launch its "small-box" model by the end of the year.

The new format is a scaled-down version of The Gym concept which, according to Darwin, will open up opportunities to enter new markets.

"The first small-box format will open in Newark, Nottinghamshire by the end of 2019 and we expect to do a roll-out of that during 2020," Darwin said.

"The concept is pretty much a slimmed-down version of what we already do. Our traditional gyms are, on average, around 15,500sq ft in size. The small box sites will be between 5,000sq ft and 9,000sq ft.

"What it does is offer us the opportunity to go into towns that wouldn't previously have been on our target list, because they wouldn't have been big enough – towns where the overall population is between 25,000 and 60,000.

"While we don't have an exact target number of sites for the small box model yet, we did a study with PwC which showed that there could potentially be an additional 300 small box sites across the UK. So the volume is there."

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The Gym Group has attributed strong growth in revenues and profits on a pipeline of new openings and the success of its 'Live It' premium membership model.
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