Healthy profits expected from The Gym Group

All eyes will be on premium membership and mini-gyms as The Gym Group reports its results for the first half on Thursday.

Led by chief executive Richard Darwin, the company has 169 locations in the UK – including the Stack Leisure Park in Dundee, which opened last year.

The firm will update investors on the roll-out of its LIVE IT membership, which offers customers benefits like using multiple gyms or taking a friend for an additional cost.

At the trading update in July, the group said its profitability per customer had improved due to the product, as more members picked the option.

It is also expected to flesh out plans for so-called “small box” gyms, which use less space than traditional sites. The first site is due to open in Nottinghamshire later this year.

City analysts at Peel Hunt expect profit before tax to be 30% higher at £9 million for the first six months of the year, following the opening of new gyms and a rise in membership numbers.

As of June 30, member numbers had hit 796,000.

Analyst Douglas Jack said the business is well positioned to maintain growth in the coming years.

“We believe the demand/ supply dynamics of the low-cost gym market sector support The Gym Group’s growth ambitions,” he said.

“For example, in the year to March, 65% of gym market membership growth was in low-cost gyms, within which 70% of new gyms were opened by the top two operators.”

He added that, at its current rate of growth, The Gym Group is set to pay off all its bank debt over four years.

The fast-growing company

The Gym Group has 12 locations in Scotland.