The Gym Group sees its share price sink 16%

The Gym Group shares have tumbled today after the company said some of its ‘workforce-dependent’ sites were struggling amid the shift to hybrid or home working. 

Shares in the group were down 15.67 per cent or 19.37p to 104.23p this afternoon, having fallen over 60 per cent in the last year. 

The company’s utility costs are expected to rise by £8million to £10million next year, it told investors. 

But, in its latest trading update, The Gym Group said its membership numbers stood at 838,000 as on 31 October representing a rise of 16.7 per cent from 31 December 2021.

In the red: The Gym Group saw its share price fall over 16% today amid a trading update 

Revenue for the 10 months the end of October was £143.2million, up 78 per cent on a year ago. 

In October, the group’s like-for-like revenue was at 93 per cent when compared against the same period back in October. 

But, the group said its performance in 16 ‘workforce-dependent’ sites was ‘significantly below these levels’.

The group said it was on track to achieve its target of 28 new openings this year, and 25 to 30 new sites next year.

It said it continues to manage its costs, with energy volumes 100 per cent hedged up to the end of the first quarter of next year and 63 per cent hedged for full-year 2023.

Amid the implementation of tight cost controls, non-property net debt stood at £68.5million at the end of the period.  

Richard Darwin, chief executive of The Gym Group, said: ‘Against an uncertain backdrop, we are pleased to see memberships continuing to build over the last four months demonstrating that people are prioritising their physical and mental health – and that gyms are an important part of the local community.

‘Working patterns have continued to evolve post the pandemic and while performance of our 16 workforce-dependent sites is disappointing, the rest of the estate continues to recover well and demonstrate the resilience of our business model. 

‘Having delivered on the most ambitious rollout programme in our history to date, we are encouraged by the momentum in the pipeline for new gyms next year and believe that there is considerable scope for further growth.’

He added: ‘We are cognisant of the macro environment and continue to monitor developments very carefully. However, the Board remains very confident in the long-term opportunities for The Gym Group; our value proposition has always been a competitive advantage and we believe that in the current consumer environment, our high quality, affordable offer will be even more compelling and attractive.’

Lara Martinez, an analyst at Third Bridge, said: ‘Despite surpassing pre-Covid membership levels, The Gym Group still struggles with locations dependent on traditional working patterns. Our specialists suggest this trend is here to stay, and estate reconfiguration is something to watch”

‘The Gym Group should be a beneficiary of people’s trading down from premium gym locations although some will trade out of the sector altogether.’

This post first appeared on Dailymail.co.uk