Gym Group’s shift in guidance for LFL sales recovery (vs membership) by 4Q22E suggests a lower number of members per club with price increases taking time to transition through. In our view, this does not reflect lower demand but a covid change whereby gym-goers require more ‘personal space’. A focus on yield, with a c£4 price gap vs the competition, will ensure profitability and returns remain robust but FY22E EBITDA is lowered 6.9% including a £2m step up in energy costs, moving our TP to 320p (from 340p). An accelerating pipeline and rebranding provide significant scope for future growth with relatively less inflationary exposure especially now energy is locked in. The shares offer excellent value and do not fairly reflect its strong balance sheet, nor its improved expansion and overall growth outlook. BUY

Equity Analysis /
United KingdomGB : Gym Group - Yield optimisation in focus
Anna Barnfather
Analyst - Leisure @ CGS-CIMB
Andrew Wilkinson
Analyst - Leisure @ CGS-CIMB
25 March 2022

25 March 2022
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