Budget gym chain races up after buying its rival
LOW-cost health and fitness business The Gym Group flexed its muscles yesterday by buying 18 gyms from rival Lifestyle Fitness in a £20.5m deal.
The sites – which are across the Midlands and the North – secure the company’s position as the country’s second-biggest budget gym operator.
They also nearly double its growth rate for 2017, as it was already planning to open 20 sites over the year after launching 15 in 2016 and 19 in 2015.
The sites, which collectively generated earnings of £3.5m last year, further boost The Gym Group’s growth after it posted an 18.8pc jump in revenues to £42.8m in the six months to June 30, while profits rose £1.9m to £6.5m.
Chief executive and former England squash player John Treharne said he expects the new sites to start generating earnings by 2019.
The purchase follows a wave of consolidation in the gym sector, with Pure Gym buying smaller rival LA Fitness in 2015, and David Lloyd buying sites from Virgin Active as it increasingly focuses on it high-end health centres.
The Gym Group targets the lowcost end of the market, where it has benefited from a fall in the number of local gyms over recent years due to a lack of funding from councils. Yesterday shares rose 5.8pc, or 11.75p, to 213.5p.
The FTSE 100 slipped to its lowest level in more than four months, down 1.1pc, or 79.92 points, to 7215.47 as the pound hit its highest level against the dollar since the Brexit vote. Sterling has rallied since the Bank of England signalled earlier this week that it would raise interest rates in the ‘coming months’.
The FTSE’s decline is no doubt a worrying sign for big-cap punters, but at least they don’t have to worry about the possibility of a nuclear war at the moment.
At least, that’s what Martin Gilbert, co-chief executive of Standard Life Aberdeen, would have you think.
In a CNBC interview, he told investors to ‘just ignore’ North Korea’s second missile over Japan. ‘Our view is: let’s just keep investing as we normally do,’ he said. ‘I think, if it gets serious, you obviously have to take it, you obviously have to look at it, but I wouldn’t do anything at this precise moment.’
No need to reach for the tin hats just yet, then.
High Street staple JD Sports certainly doesn’t seem too worried about military tension in that part of the world, announcing it has entered into a joint venture with South Korean footwear firm Shoemarker. It has acquired a 15pc stake in its subsidiary Hot-T – also a shoe company – for around £5.5m, and has the option to buy a further 35pc share once the firm has revealed its results for 2017. The retailer rose 3pc, or 11.1p, to 383.2p, and is up 14.5pc for the week after announcing a blockbuster set of results on Tuesday.
Cruise ship operator Carnival was the FTSE 100’s biggest loser after being cut to ‘ neutral’ from ‘outperform’ by analysts at Credit Suisse. The broker is worried that Carnival faces a more difficult environment amid geopolitical tensions and damage caused by Hurricane Irma in the US. Shares fell 6.2pc, or 317p, to 4783p.
Broker Berenberg gave Next a ‘sell’ rating despite the High Street retailer wowing markets earlier this week when it reported that performance for the first half of 2017 had remained resilient.
Analysts pointed out that although Next upgraded its sales guidance, it left its profits forecast broadly unchanged.
They stated: ‘ We expect the decline of Next’s undifferentiated private-label product to continue, offset in the near term by growth in the sales of third-party brands.’
Next shares yesterday rose 1pc, or 51p, to 5045p.