The Gym Group ‘still breaking records’ as profits and revenue increase

The Gym Group has posted record revenues and profits as it strengthens its position in the UK’s low-cost fitness sector.

Speaking to Health Club Management, CEO John Treharne said: “The year was one of many milestones for the Gym Group. It’s great to see we’re still breaking records after 10 years."

Reporting results for the year ending 31 December 2017, the company posted pre-tax profits (EBITDA) of £28m, an increase of 23.2 per cent on the 2016 figure of £22.7m.

Revenue during the year increased by 24.3 per cent, from £73.5m to £91.4m.

“In terms of milestones, we opened our 100th club in 2017 and recorded our highest ever opening-day membership," said Treharne.

“We also had a record 26.7 million gym visits during 2017 – up from 21.7 million in 2016 – and achieved the busiest day ever in one of our gyms, with 2,364 people visiting in a 24-hour period.”

He said these strong results show the company's strategy of focusing on member satisfaction is highly effective.

“Member engagement is big for us and it starts with the induction process,” he said. “It's encouraging to see our average membership tenure has gone from 8.9 months to 10.1 months over the last two years, so members are staying longer in their first period of membership.

“Another measure of our success is the fact we won the FEEFO Trusted Service Award and have held that for the last two years – that’s a clear indication of member satisfaction.”

Another customer service initiative, the premium Live It membership option, has been piloted across 44 sites in the South East and Treharne says a nationwide rollout will be undertaken this year.

Live It membership costs £19.98, compared with £14.99 for a basic membership.

It offers three add-ons – the option to use more than one gym, a Bring a Friend programme, and the use of FitQuest fitness and body composition analysers.

The company is committed to using initiatives like Live It to drive new growth in the mature parts of the estate where it reported EBITDA dipped very slightly from £476,000 in 2016 to £461,000 in 2017. Treharne says this performance is in line with expectations and ROI on the mature estate remained stable at 32 per cent.

On the development front, the group added 39 new clubs during 2017 – 21 new openings, 18 from the acquisition of Lifestyle Fitness in September and a site from Rush Fitness in December.

Looking ahead, Treharne expects to open another 15-20 new clubs during 2018, but says the company is also looking out for further acquisitions.

When it comes to property investment, the group has so far converted eight of the Lifestyle sites, with work currently underway on two further properties.

According to Treharne, strong results at the converted clubs have resulted in a decision to press ahead and convert the remaining eight locations, with that announcement being made today, (20 March 2018) along with the 2017 financial results.

“We’re encouraged by the results in the clubs we've converted so far and will look to overhaul the remaining eight clubs by September 2018,” he said.

Where Lifestyle clubs have had a full overhaul, been rebranded and refurbished, adopted the Gym Group pricing model and moved to 24/7 operation, Treharne says an increase in membership of 10.8 per cent is being achieved.

Where the new pricing model has been introduced in advance of a more comprehensive overhaul, this has still led to an increase of 5 per cent in the number of members.

The Gym Group now operates 130 sites and has 607,000 members, an increase of 35.5 per cent on 2016.