The Gym Group – this morning’s results for 2024 show that the group’s momentum is building up and that it is strengthening its core, shares now 138p, TP 170p

12.03.2025

Nearly 900,000 people use the facilities of The Gym Group (LON:GYM) across the UK.

It is expanding at a steady pace, and its growth plan offers sensible upside to its revenues, profits and its share price.

The Business

The Gym Group was a pioneer of the low-cost gym model and now operates over 245 high-quality sites across the UK.

Its gyms offer 24 hours a day, 7 days a week opening and flexible, no contract membership.

The group’s gym member application includes the introduction of online workouts and provides a personal training booking service.

It provides multi-gym access, fitness tracking, on-demand fitness classes, and refillable Yanga sports water, all available for an added charge.

As at 31st December 2024 there were 891,000 members nationwide.

The group’s carbon-neutral chain of gyms records over 65m visits per annum.

Last year the group opened 12 new gyms in Orpington, London Euston Road, Manchester Oxford Road, Welwyn Garden City, London Plaistow, Dudley, London East Ham, London Bromley by Bow, Surbiton, Gillingham, London Shepherds Bush and London Elephant and Castle.

The Results

For the year to end-December 2024 the group reported an 11% improvement in its revenues to £226.3m (£204.0m), with its adjusted pre-tax profit at £3.6m (loss £5.5m), generating 2.9p (loss 3.4p) earnings per share.

The group’s ‘Next Chapter’ growth plan is aimed at driving up returns on the group’s mature gym estate, through higher yield, more cost-effective promotion, better-targeted customer acquisition and early progress on retention.

Management Comment

CEO Will Orr stated that:

"This strong set of results reflects good progress against the strategic objectives set out in our Next Chapter growth plan. 

We have seen excellent momentum to date with increased membership, revenue and profit; and our market-leading proposition is more resonant than ever, in a sector that is growing.

We will continue to execute on initiatives started in FY24 alongside new initiatives in place for FY25, underpinned by our investment in technology and data to drive future growth.

As a result, we believe there is still more benefit to come from the Next Chapter growth plan, giving us the confidence to increase guidance again to the top end of the recently revised analyst forecast range for FY25.

We also remain on track to deliver our target of opening c.50 new high-quality gyms over three years, funded from free cash flow."

Current Trading And Outlook

This morning the group reported that its trading momentum had remained strong in its peak recruitment months of January and February.

Group revenue after just two months has grown by 8% year-on-year, reflecting a 4% increase in average members and a 4% growth in yield, while its like-for-like revenue was up 3%.

The company has a plan to open 14-16 new sites in 2025, in line with its overall plan to open some 50 sites over three years, funded from free cash flow.

The group guided that its Adjusted EBITDA Less Normalised Rent for FY25 should now be expected to come in at the top end of the recently revised analyst forecast range of £49.0m-£50.8m. 

The Equity

There are some 180.69m shares in issue, some 87.84% of which are held by investment professionals.

Larger holders include Liontrust Investment Partners (10.80%), RBC Global Asset Management (6.37%), FIL Investment Advisors (5.00%), Invesco Asset Management (4.86%), Legal & General Investment Management (4.81%), Janus Henderson Investors (4.34%), Threadneedle Asset Management (4.02%), SFM UK Management (3.84%), AXA Investment Managers (3.82%) and GVQ Investment Management (3.81%).

Broker’s Views

Some 10 analysts follow the group, with 8 calling the shares a Buy, and 2 calling a Hold.

The consensus average Target Price is 192p, with the Highest being 225p, the Lowest being for 160p.

Ahead of today’s results the consensus of views for 2025 is for £241m/£247m revenues, and between a £2.5m loss to a £6.0m pre-tax profit for the year.

My View

This group has a very sensible growth plan for expansion in a quite competitive market.

Its membership rates are appealing for newcomers, whilst its club offer is attractive.

Its shares have already reacted positively to this morning’s news, rising 4p to 138p, valuing the whole group at just £249m, for what is a cash-generative business.

I now set a new Target Price of 170p.

(Profile 11.04.19 @ 220p set a Target Price of 300p*)

(Profile 12.03.25 @ 138p setting a new Target Price of 170p)

Asterisk * denotes that the Target Price has been achieved since Profile publication