FINANCIAL SUMMARY
FINANCIAL SUMMARY
Next Chapter growth plan Orr commented: “With a strong start to 2024, and clear signs that the demand for health and fitness has never been stronger, these are solid foundations on which to build our Next Chapter growth plan.” That plan consists of three parts: strengthening the core of the business by continuing to increase like-for-like revenue from existing sites; using the cash this generates to accelerate the rollout of quality sites; and creating options over the long term to broaden growth, “developing [the Group’s] proposition into new channels, new adjacencies and/ or new markets”.
Orr added: “Over the next three years, we aim to strengthen the performance of our core business and accelerate The Gym Group site rollout. “It is clear that Greater London and ‘urban residential’ locations deliver the best returns for us. This, therefore, is where we are concentrating our site opening programme for the time being.” Referencing PwC research that suggests scope for a further 10–15 years of low-cost gym sector growth, Orr confirmed: “There continues to be substantial headroom for low-cost gyms in the UK and we are fully focused on our aim of making high-value, low- cost fitness even more accessible to all.”
Outlook – 2024 and beyond Trading started well in 2024, with revenue for the first two months up 16 per cent year-on-year – and like- for-like revenue up 12 per cent. Membership numbers reached 909,000 at the end of February 2024 (+7 per cent vs end of December 2023). And there is more scope for growth, according to Will Orr, appointed CEO of The Gym Group in 2023: “Our analysis shows that within the catchment of our existing 233 sites, there are a further circa 5 million people within our target age range who are either members of another gym, or considering joining a gym.” Like-for-like revenue in 2024 is forecast to increase by 4–5 per cent overall, as the impact of the early price increases normalises over the course of the year. Yield will continue to be a focus for 2024; The Gym Group remains “on average £2 per month cheaper”
than its closest competitors within a one-mile radius and there are plans to “continue to narrow that gap in 2024”. The focus for 2024 will also widen to include improving member retention and lifetime value. “Significant additional enhancements” are planned for The Gym Group app in 2024, which is already used by around 80 per cent of the total member base. In terms of site openings, 10–12 new clubs are planned for 2024, 16–18 for 2025 and 20 for 202 – a total of c.50 sites funded from free cash flow, with a target ROIC of 30 per cent. While mature sites achieved 19 per cent ROIC in 2023, and 20 per cent in 2022, sites opened in 2021 are already on-track to deliver 30 per cent ROIC with 2022 openings “on a similar trajectory”. Leverage is expected to remain within the range of 1.5–2.0x for 2024.
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STATE OF THE UK FITNESS INDUSTRY REPORT 2024
STATE OF THE UK FITNESS INDUSTRY REPORT 2024
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