Gym Group - The power of marginal gains
Gym Group has accompanied confirmation of FY23 profit resilience and continued buoyancy (like-for-like revenue up 12% in the first two months of 2024) with a clear commitment ‘to accelerate, not reinvent the wheel.’ The latter is telling with new senior management endorsing Gym Group’s sweet spot as a low-cost operator in the long-term growth market of health and fitness. Its confidence in material scope for enhanced pricing and member acquisition and retention is complemented by expansion targeted at sites with perceived 30% return on invested capital (ROIC) potential (10 to 12 openings in 2024 with c 50 over three years), although the typical two-year profit maturation profile means no quick earnings fix. Improving finances (1.7x leverage) should allow this as well as increasingly important technology investment.Gym Group is a holding company based in the United Kingdom. Co. and its subsidiaries provide health and fitness facilities. As of Dec 31 2017, Co. operated 128 gyms across the U.K.with a total of 607,000 members. Co.'s health and fitness facilities are traded through 120 sites operating under and being converted to The Gym brand and eight sites operating under the Lifestyle Fitness brand, with each considered as a separate operating segment.
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