The Gym Group swings to loss following coronavirus closures
The Gym Group today posted a hefty loss for the first half of the year after the budget gym chain was forced to close all its branches due to the coronavirus outbreak.
The figures
The Gym Group posted revenue of £37.3m for the first six months of the year, down almost 50 per cent on the same period last year.
The company posted an adjusted pre-tax loss of £26.3m, compared to a profit of £7.1m last year.
Adjusted earnings per share were -14.9p, compared to 4p.
Non-property net debt was £29.2m, down from £47.2m in the same period last year.
Why it’s interesting
The Gym Group’s half-year figures lay bare the impact of coronavirus on the no-frills gym chain.
The company was forced to shutter its estate on 20 March to halt the spread of the virus, and sites remained closed for the remainder of the reporting period before gyms reopened in England on 25 July.
As a result, the company saw its revenue slashed in half and swung to a deep pre-tax loss over the period.
The Gym Group said it implemented cost reduction plans to help reduce cash outflow during the closure period.
It also raised almost £40m through an equity placing and secured a £30m extension to its existing £70m revolving credit facility.
But the chain has suffered a decline in membership numbers as a result of the crisis. Prior to gyms reopening on 25 July total membership was 658,000, down from 796,000 at the end of the first half 2019.
The Gym Group, which opened 20 new sites last year, was forced to put its expansion plans on hold as a result of the virus.
However, the company opened four new sites during August that had been under construction prior to lockdown. This took its total number of gyms to 183.
What The Gym Group said
Chief executive Richard Darwin said: “Following our decisive actions during lockdown to minimise costs and secure additional liquidity, we have reopened as the strongest capitalised company in the sector.
“We anticipate the long-term structural growth of low-cost gyms will continue to be driven by the underlying interest in health and fitness, which is accelerating as a result of Covid-19 and the government’s initiative to reduce obesity.
“With the likelihood of a challenging economic environment in the coming months, gym-goers will increasingly look for great value and as the lowest-priced high quality gym operator we are well placed to meet this demand.”