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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

News

Buy shares in Gym Group says Peel Hunt, as gym reopenings in Europe raise hopes of recovery

Corporate broking and advisory firm, Peel Hunt, has issued a 'buy' recommendation for shares in The Gym Group.

Peel Hunt says if gyms in the UK can reopen soon, evidence suggests The Gym Group "could resume profitable trading soon." In this scenario, it expects its financial forecasts for the company to 'remain intact'.

"The US and Switzerland have led the way in allowing gyms – which should be part of the solution in this health crisis – to re-open." says the note issued by Peel Hunt.

"Planet Fitness in the US experienced only a 'slight cancellation bump' in membership and Pure Gym in Switzerland has retained over 90 per cent of paying members", says the note, "both are ahead of our Gym Group forecast assumption of 25 per cent fewer members in the second half of 2020.

"In our view, the safe re-opening of gyms overseas under strict protocols could justify the re-opening timetable for UK gyms being brought forward."

Peel Hunt said: "Gyms are part of the long-term solution and they should be re-opened soon....the overseas experience suggests that The Gym Group could resume profitable trading soon.

"We estimate that The Gym Group could re-open on a cash-neutral basis with membership at 60 per cent of historic levels. This is helped by a 99 per cent gross margin and a labour ratio at c10 per cent."

Peel Hunt's analysis picks up on the performance of Gym Group's close competitor, Pure Gym, and gives insights into its Swiss portfolio of clubs as evidence, saying they're performing "in line with expectations" since they reopened on 11 May.

Continuing to cite Pure Gym's as an example, Peel Hunt explains its opening protocols and expected results as follows:

"With gym capacity restrictions limited to 10 sq m per person; minimum separation of 2m between attendees at all times; group exercise limited to five participants; locker rooms and showers open, but with social distancing maintained; and extensive cleaning and sanitation regimes. PureGym’s forecast member base at re-opening vs original (pre-COVID-19) budget is 82 per cent in the UK."

"The company [Pure Gym] has experienced no significant change in its membership base since its full-year results in April," notes Peel Hunt. "Across the group, 85 per cent of members were still retained as at 22 May, and the company expects to close the gap (to 100 per cent) as re-openings prove successful and as lockdown measures start to soften.

"In Switzerland, two weeks after reopening, Pure Gym's club attendance was at 65-70 per cent of 2019 levels (61k vs 92k); and paying members were over 90 per cent of 2019 levels (54k vs 59k).

"Attendance is weighted towards younger members, and evening peaks in attendance have been suppressed. In our view, this is helped by the 24/7 trading model and more flexible lifestyles, with more working from home."

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Corporate broking and advisory firm, Peel Hunt, has issued a 'buy' recommendation for shares in The Gym Group.
HAF
2020/THUMB345592_443522_391154.jpg
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News

Buy shares in Gym Group says Peel Hunt, as gym reopenings in Europe raise hopes of recovery

Corporate broking and advisory firm, Peel Hunt, has issued a 'buy' recommendation for shares in The Gym Group.

Peel Hunt says if gyms in the UK can reopen soon, evidence suggests The Gym Group "could resume profitable trading soon." In this scenario, it expects its financial forecasts for the company to 'remain intact'.

"The US and Switzerland have led the way in allowing gyms – which should be part of the solution in this health crisis – to re-open." says the note issued by Peel Hunt.

"Planet Fitness in the US experienced only a 'slight cancellation bump' in membership and Pure Gym in Switzerland has retained over 90 per cent of paying members", says the note, "both are ahead of our Gym Group forecast assumption of 25 per cent fewer members in the second half of 2020.

"In our view, the safe re-opening of gyms overseas under strict protocols could justify the re-opening timetable for UK gyms being brought forward."

Peel Hunt said: "Gyms are part of the long-term solution and they should be re-opened soon....the overseas experience suggests that The Gym Group could resume profitable trading soon.

"We estimate that The Gym Group could re-open on a cash-neutral basis with membership at 60 per cent of historic levels. This is helped by a 99 per cent gross margin and a labour ratio at c10 per cent."

Peel Hunt's analysis picks up on the performance of Gym Group's close competitor, Pure Gym, and gives insights into its Swiss portfolio of clubs as evidence, saying they're performing "in line with expectations" since they reopened on 11 May.

Continuing to cite Pure Gym's as an example, Peel Hunt explains its opening protocols and expected results as follows:

"With gym capacity restrictions limited to 10 sq m per person; minimum separation of 2m between attendees at all times; group exercise limited to five participants; locker rooms and showers open, but with social distancing maintained; and extensive cleaning and sanitation regimes. PureGym’s forecast member base at re-opening vs original (pre-COVID-19) budget is 82 per cent in the UK."

"The company [Pure Gym] has experienced no significant change in its membership base since its full-year results in April," notes Peel Hunt. "Across the group, 85 per cent of members were still retained as at 22 May, and the company expects to close the gap (to 100 per cent) as re-openings prove successful and as lockdown measures start to soften.

"In Switzerland, two weeks after reopening, Pure Gym's club attendance was at 65-70 per cent of 2019 levels (61k vs 92k); and paying members were over 90 per cent of 2019 levels (54k vs 59k).

"Attendance is weighted towards younger members, and evening peaks in attendance have been suppressed. In our view, this is helped by the 24/7 trading model and more flexible lifestyles, with more working from home."

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Corporate broking and advisory firm, Peel Hunt, has issued a 'buy' recommendation for shares in The Gym Group.
HAF
2020/THUMB345592_443522_391154.jpg

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Anthony Hamilton, the father of F1 racing driver Lewis Hamilton, is launching a fitness equipment
The pandemic has had an "unprecedented" impact on physical activity levels in England, with 1
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A global innovation competition has been launched to find ways to encourage and support more
Xponential Fitness has acquired Body Fit Training in a deal worth US$44m. The deal takes
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CEO of Orbit4, Daniel Jones, says: “There’s no reason traditional gyms and smart gyms can’t live in harmony. With a little reorganisation and education, there’s a really bright future for all gyms.”
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Featured operator news: Everyone Active bolsters Everyone on Demand and enters second year with five new partnerships
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Company profile: Gympass
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Company profile: Venueserve Fitness
Venueserve Fitness is an easy-to-use, low-cost web- and mobile online exercise platform, already being used ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Uniforms
Service Sport: Uniforms
Fitness equipment
Octane Fitness: Fitness equipment
Spa software
SpaBooker: Spa software
Skincare
Comfort Zone - Davines S.p.A: Skincare
Hydrotherapy / spa fragrances
Kemitron GmbH: Hydrotherapy / spa fragrances
Architects/designers
Zynk Design Consultants: Architects/designers
Salt therapy products
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Exercise equipment
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Newport, Shropshire
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Diary dates
01-03 Feb 2022
Coventry Building Society Arena, Coventry, United Kingdom
Diary dates
07-10 Apr 2022
Exhibition Centre , Cologne, Germany
Diary dates
15-16 Jun 2022
ExCeL London, London, United Kingdom
Diary dates
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tbc, Dunedin, New Zealand
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