Gym Group upgrades outlook as Gen-Z shuns heatwave and World Cup
Gym Group has upgraded its outlook after managing to tempt Gen-Zers into its gyms throughout the summer, despite the distractions of the World Cup and multiple heatwaves.
Will Orr, chief executive of the no-frills gym provider, said the group is still on course to deliver three per cent sales growth despite a “noisy macro, some hot weather, the World Cup, et cetera”.
“We’ve actually been able to trade consistently through all of that, and I think that’s because gyms and fitness are just so hardwired into the way people live now,” he told Morning Wire.
The London-listed group posted a £4.3m pre-tax profit in the six months to June, improved by 48 per cent on last year, as revenue jumped by 10 per cent to £133m.
The firm upgraded its earnings guidance on Wednesday, telling shareholders it expects to deliver at the top end of its £60.5m to £62m range. Shares in the group jumped by six per cent to 204p in early trading.
Gym Group says Gen-Z are increasingly prioritising fitness in their discretionary spend, even as the cost-of-living crisis bears down on their wallets.
More than half (55 per cent) of young people rank health and fitness as either their first or second spending priority, up from 44 per cent last year, according to the company’s research.
Calls for ‘stable business environment’
Ahead of the first Budget under Andy Burnham, Orr appealed to the new Prime Minister to deliver a “stable” business environment.
“We’re growing, we’ve got a million members, we’re opening more sites. It’s affordable fitness, I think that’s good for the health of the nation, it’s good for growth.
“So I think, like everybody else, we want a stable, growth-supportive environment for business to be able to contribute to the economy and, in our case, to contribute to social value and the health of the nation. So I just hope it’s a pro-growth agenda”.
Brick-and-mortar businesses across the country have raised the alarm that the Treasury could hike business rates on larger businesses.
Retail, hospitality and leisure firms have demanded reform of the tax system, which they say risks undermining Burnham’s pledge to rejuvenate British high streets.
Orr said the Gym Group was left largely unscathed by former Chancellor Rachel Reeves’ business rates raid last year but he warned the new government against further radical changes to the tax system.
The budget gym provider hiked its average membership rate by £1.81 to £26.91 in the six months to June, but Orr said most of this price hike was necessary to keep pace with inflation.
“The value for money remains very high, and we’re continuing to add value to the proposition by modernising the estate in terms of design and kit innovation and so on,” he said.
Gym Group opened four new sites in the first half of this year and expects to open at least 20 in total in 2026. Its membership grew by five per cent to more than 1m in the period.
Analysts at Deutsche Bank said: “We believe the business is executing strongly alongside a supportive market backdrop and well placed to deliver its self-financed, value-creating rollout.”