Gym Group sees sales almost halve in 2020 amid pandemic disruption
The firm told investors that total revenues slid by 47.4 per cent to £80.5 million after various government restrictions reduced its number of trading days by 45 per cent.
All of the group’s 184 gyms are currently closed after health and leisure venues were forced to shut their doors by governments on both sides of the Border as part of lockdown measures.
After the English November lockdown ended the group reopened all of its sites, but was forced to close 163 of them later in December due to Tier 4 measures, before the latest lockdown was enforced.
Gym Group said it is burning through around £5m each month during the current lockdown, although this is reduced from £6m in the November lockdown due to government grants.
It said it has “significant liquidity” available through its £100m banking facilities and is in discussions with its lenders to review its covenant tests on the loans.
At the end of 2020, the company had 578,000 members, falling from 794,000 members at the end of 2019.
It said it continued with expansion plans in 2020, opening eight sites including its latest gym in Chichester.
Gym Group said it believes there is now an “opportunity to access excellent new sites at attractive rents” as it continues to grow.
Chief executive Richard Darwin said: “Through the outstanding work of our team, we provided a Covid-secure exercise environment for our members and demonstrated the resilience of our business model by trading profitably when gyms have been open.
“Our cash management during the pandemic has ensured we ended 2020 with manageable levels of debt and significant liquidity.
“At a time when health and fitness has never been more important to the nation, we are ready to emerge from the pandemic and take advantage of the many opportunities available us.”
Analysts at brokerage Numis noted: “Net debt was unchanged over the year, reflecting £41m of new equity raised in April 2020.
“This helped to cover losses during lockdown, allowing the group to continue to reinvest in new openings (eight in 2020).
“The company has significant liquidity headroom against its £100m bank facility, £30m of which was extended in December and now runs to June 2022 (the remainder to October 2023).
“Importantly, its guidance for monthly cashburn during shutdown has reduced from £6m to £5m as a result of recently announced government grant support.”
They added: “We prudently assume that the estate remains closed in Q1 (although progress on vaccination may allow an earlier opening).
“While estate churn is a normal part of the low-cost gym model (especially students) there is likely to be an asymmetry between leavers and joiners in 2021, as members are gradually recruited post lockdown.
“We assume members are 50 per cent below 2019 levels in 2Q21 and 25 per cent by H2, although the exact shape of the recovery curve is clearly hard to predict.”
Many gym operators, particularly smaller ones, have raised concerns about a lack of financial support for the sector amid the pandemic.
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