With new concepts being rolled-out, such as a personal trainer model, the group is showing no signs of stagnating
Healthy start to the new year for Gym Group
- Total year-end revenue growth and membership numbers grow by 23.6% and 9.7% respectively
- Business continues to build scale seeing 20 new sites being rolled out in 2019, which included the first two of their new small box gym concept, which delivers low cost fitness to smaller towns
- LIVE IT, the Group’s premium pricing product, also made good progress with roughly 19% of members subscribing
- With robust performance across the nation, the Group remains confident that they will deliver full-year financial results in line with expectations
- Recommendation: Despite increasing competition, with the Group’s good track record, scope for future growth and the management’s ability to be innovative we maintain our ‘Buy’ recommendation
Gym Group has released another positive trading update this morning delivering strong growth in members and revenues. The business continues to build scale, seeing 20 new sites being rolled out in 2019. Total year-end revenue growth and membership numbers have grown by 23.6% and 9.7% respectively. LIVE IT, the group’s premium pricing product, also continues to make good progress with roughly 19% of members subscribing, which partly reflects the 7.6% rise in average revenue per member growth. With robust performance across the nation, the Group remains confident that they will deliver full-year financial results in line with expectations.
The disruptive model of flexible gyms offering consumers 24 hour access, among a host of other benefits, has been an area of high potential in recent years and is likely to be a popular segment for years to come. These results show good progress and offer no signal of stagnating. The Group continues to introduce new concepts within its existing membership packages such as the roll-out of their new personal trainer model in March, which should help attract new target markets.
This update will provide investors with a positive outlook heading into 2020 before the scheduled release of final figures in March. Growth continues to be at the forefront of management’s minds with somewhere in the region of 20-28 new sites expected in 2020. Although competition is likely to increase in the coming years, with the group’s good track record, scope for future growth and the management’s ability to be innovative we recommend the shares as a ‘Buy’ to investors willing to accept a higher level of risk
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