Low-cost fitness business The Gym Group has Scotland in its sights as it limbers up for another raft of openings.
The firm, which already has half a dozen of its 90 or so gyms north of the Border, is opening new sites at Murrayfield and Cameron Toll in Edinburgh and chief executive John Treharne told The Scotsman that Scotland would “very much feature” in its expansion roll-out.
We will continue to expand rapidly in 2017John Treharne
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His remarks came as the company said it had swung out of the red with a maiden profit before tax of £6.9 million in 2016 against losses of £12.4m a year earlier.
The group, which floated on the London market in November 2015, added a further 72,000 members in the year, up nearly a fifth at 448,000, after opening 15 gyms.
It said the new year fitness drive helped it notch up record numbers of new members in January and February, with another 47,000 signed up.
The firm now plans to open about 20 gyms over the course of 2017 – at the top end of its previous expectations for between 15 to 20.
Treharne said 2016 had been a “good year” for the fast-growing company, which has a 24/7, no-contract business model.
He told investors: “2016 has been a good year with strong financial and operational progress. Our existing estate continues to deliver excellent returns and our low cost, 24/7, no contract model is disrupting the market and attracting new members.
“We will continue to expand rapidly in 2017 through a well developed site pipeline. We have had an encouraging start to 2017 with January and February, key months for any gym business, showing record membership levels with an increase in members to 495,000.”
The group increased its chain to 89 gyms by the end of 2016 and has already secured sites for 17 more. It said six new gyms are set to open in the first half, with most of the year’s planned new sites opening in the final six months.
Group adjusted earnings before interest, tax, depreciation and amortisation (Ebitda), came in at £22.7m, an increase of 33.4 per cent.
Numis Securities said The Gym Group and Pure Gym are “continuing to dominate the low-cost segment growth and gain access to the best sites”.
It added: “Some commentators have voiced concerns over competition for new sites, but we believe that the strength of Gym’s covenant and brand and its highly experienced site acquisitions teams are proving to be a major competitive advantage.”
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The group said pre-tax losses widened from £3.5m to £5.3m, while revenue fell 6.7 per cent to £153.2m.
French Connection said it had closed nine under-performing stores last year and a further two since February, with six more on the block. The company has 53 standalone stores across the UK and Europe but wants to trim this to 30.
To compound matters, activist investor Gatemore Capital Management has called for a break-up of the company, accusing the board of representing a “mockery of modern corporate governance”.
Gatemore again took aim at under-fire chairman and chief executive Stephen Marks, calling for him to relinquish his double role.