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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| The Gym Group Plc | GYM | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| -0.20 | -0.18% | 110.00 | 16:35:20 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 110.00 | 110.00 | 111.40 | 110.00 | 110.20 |
| Industry Sector |
|---|
| TRAVEL & LEISURE |
| Top Posts |
|---|
Posted at 20/3/2022 20:11 by spob PureGym chief: keeping faith in the business modelDespite pandemic closures and failed IPOs, Humphrey Cobbold remains confident in the no-frills approach Ian Johnston 15 hours ago Like any modern gym goer, Humphrey Cobbold, chief executive of PureGym, keeps a close eye on the numbers. When gyms were shuttered at the beginning of the UK’s first lockdown in March 2020, many perceived them as virus-friendly places. But the boss of the UK’s largest gym chain decided to take the lead on developing industry protocols for gyms to open safely. Cobbold says business leaders should speak out on issues where they have expertise. He began to lobby for support for the sector, appearing regularly in the media. “I think there’s a bit of a tendency for business to shrink into the background,” he says. “There are concerns as to how supportive of business the government is . . He had his work cut out. Cobbold presented the sector protocols to deputy chief medical officer Sir Jonathan Van-Tam and other SAGE scientists on a visit to Park Royal PureGym in west London. When Van-Tam saw the slick fitness studio, he suspected a smokescreen by being shown PureGym’s smartest site. But 57-year-old Cobbold told him: “This is £23 a month .&thins Recommended News in-depthTravel & leisure industry Re-energised gyms to muscle in on hybrid post-pandemic fitness sector Fearing a government blind spot over the UK gym sector, which the consultants Deloitte valued at about £5.5bn in 2019, he wanted to build an evidence base about the industry’s Covid-19 infectiousness. “You can take the man out of McKinsey, but you can’t take McKinsey out of the man,” he quips, having spent his early career with the management consultancy. PureGym led on developing data on infectiousness at gyms with industry association ukactive. An initial study found a total of 78 coronavirus cases in 22mn gym visits. Repeated lobbying, backed up by this data and other studies, helped to convince policymakers that gyms were relatively safe. They would open indoors in the UK before pubs after the 2021 lockdown. While Cobbold had one eye on reopening, he also needed to lead through the pandemic’s “immediate crises”. This included discussing rent deferrals with the company’s 250 landlords and taking the decision to cover the furlough wages of PureGym’s 2,000 personal trainers who missed out on government payments. In early 2020, the company had also bought Danish operator Fitness World for £350mn. The company lost almost £200mn, up from £39.6mn in 2019, a hit Cobbold described at the time as “frankly, awful”. And the heavy losses continued into last year. PureGym had net debt of more than £800mn, compared with just £70.9mn in earnings, over the nine months to September 2021. On top of this, an attempt to go public failed. Cobbold and chief financial officer Alex Wood “didn’t really have a day off between May and December”, he says, as they prepared to list — something Cobbold had tried previously at the company in 2016. But PureGym had to “raise quite a lot of capital to pay down debt and raise sufficient cash”. As public offerings slowed towards the end of 2021, investor confidence waned and PureGym pulled back. Cobbold says he was “frustrated rather than disappointed” that “the markets weren’t as responsive as we needed them to be”. Despite the high debt levels, Cobbold’s confidence comes from the business’s record. In 2016, PureGym was worth about £550mn — it is now valued at more than £1.5bn, he says. “It frustrates me that the public market investors weren’t able to see through some of the short-term wobbles in the market.” As a chief executive, you have to be clear and forthright .& Indeed, getting through the pandemic has required confidence in the model, as well as an “act of faith” that attendance would bounce back, he says. Now, PureGym expects to benefit from gym goers who want to trade down their memberships to manage the cost of living crisis. And its offer remains decidedly no-frills: the Oval venue in south London where we meet is not glamorous. But, like its 300 sites in the UK, the space is airy and perfectly functional for the 20-somethings who are spending their Wednesday morning there at a cost of about £25 a month. Cobbold is proud of PureGym’s “budget status” and accessibility. “I think this is the standard gym product that people look for. Of course, there are people who are happy paying £100 or £150 to go somewhere with a bit more granite and a bit more glass and a bit more chrome,” Cobbold says, but it is not PureGym’s model. The company offers contract-free membership and there is a variable pricing model, with costs ranging from £46.99 a month for a standard membership in Clapham, south London, to £17.99 a month for the same package in Grimsby, north-east England. It is a sign, he says, of how to run a simple business in a “sophisticated way”. Three questions for Humphrey Cobbold Who is your leadership hero? The late Andrew Grove, former chief executive of Intel. He wasn’t a big, showy leader or anything but he had a couple of key principles. He said the problem with most businesses that become successful is that they become proud of that success. That success leads to complacency and complacency is almost always a prelude to failure. You’ve got to have this ethos of healthy paranoia. What was the first leadership lesson you learnt? The importance of authenticity. If you’re leading, people are looking to you and you can only reasonably expect them to follow if they believe that the individual you’re presenting is for real. What would you do if you weren’t a chief executive? A scientist. I read sciences at Cambridge, I wanted to be a nuclear physicist. I did a couple of research science internships but it was not quite as exciting as reading about Einstein made it all sound and I got seduced by an interest in business. Undeterred by the failed initial public offering, Cobbold has pursued funding elsewhere and is undertaking a small-scale expansion in the US. “We stopped the IPO process at the end of one week and moved into discussions with private capital providers the next.” KKR would eventually invest £300mn to fund PureGym’s international expansion plans. It is a familiar path: in 2017, US private equity group Leonard Green & Partners bought a majority stake in PureGym from CCMP Capital Advisors. Cobbold rejects any notion that, under private equity ownership, he lacks control of PureGym’s direction. Decisions such as expanding into the US or launching a Peloton-style bike are taken in consultation with PureGym’s private equity owners. “As a chief executive, you have to be clear and forthright,” he says, “but it’s not just my way or the highway.” His collaborative approach leads to “robust debates”, he says, but also fosters trust in his leadership. “Leonard Green are 11,000 miles and eight time zones away,” he says. “They know they’re reliant on us and my feel for the market.” We speak in the week after John Foley stepped back as chief executive of Peloton. A “nerdy” cyclist and former chief executive of online sports retailer Wiggle, Cobbold says he uses the Zwift bike platform, rather than Peloton. And while he admires the business, he says it “probably got a bit carried away with things”. PureGym’s US investment will be small, opening three sites will risk about $20mn, he says. “If we build even a modestly sized business in America, it might be 100 or 200 sites that might be worth $300mn to $500mn.” The cautious optimism of not “betting the company” on expansion recalls Van-Tam’s warnings to avoid “tearing the pants out of” pandemic restrictions. With an eye trained on the data, Cobbold says: “If it works, great, if it doesn’t, we’ll have learned why it doesn’t work.” |
Posted at 20/3/2020 18:11 by pugugly Now formally shut down for an indefinate period but massive Gov supportg to subsidise staff wages and rates - so far as newsflow goes at the moment NO RELIEF against lease charges - Investors I suggest need an announcement from the company of an estimated cost per ongoing month during shutdown - Subscriptions of course will need to be extended foc for the period of the shutdown.Could it be that those buying today will have caught the proverbial falling knife or will they be like the wise virgins and filled their lamp with vast quantites of pent up consumer demand that will light up their lives when (and that IS A BIG WHEN) life gets back to the old normal. |
Posted at 19/3/2020 10:27 by thomshrike 2 comments from me:- I expected a share price bounce, but probably some people are still expecting "peak negative news" which will be if and when their gyms are finally shut down. - a fellow investor asked the company what is the take-up rate of the fee freeze option. Apparently it is currently 2% of the members, which - good news - is much lower than what I would have anticipated at this point. |
Posted at 12/3/2020 08:56 by thomshrike Just putting it into perspective: assume that (i) by reductio ad absurdum GYM LN makes 0 (zero) ebitda this year, instead of 62m consensus; (ii) things go back to normality after 12 months.That hypothetical loss of value of 62m compares with a 166m loss in market cap since the beginning of the downturn. Almost 3x as much. The share price is now below the IPO price, despite the company having grown >3x in size and profits. It's interesting that, in a market where most people claim to be value investors, momentum continues to be dominant. |
Posted at 23/1/2020 00:43 by masurenguy Rated a Hold by Tempus in The Times today !"The Gym Group is well placed to capitalise on consumers’ growing enthusiasm for low-cost facilities and the long-term increase in the desire to be healthier and fitter. The shares have risen by just under 50% in the past year and, with a dividend yield of just under 1%, are for the growth investor. Trading at 20 times Liberum’s forecast earnings, they are one to tuck away. ADVICE Hold: WHY - Low-cost operator taking advantage of growth of budget fitness" Complete article here: |
Posted at 15/1/2020 17:49 by masurenguy Well any trendy categorisation that puts a positive spin on the company in order to bring investors on board is always welcome. I tend to adopt a more pragmatic view that they have the right business model to exploit the growing H & F market, particularly in smaller and secondary locations, and which also insulates them to a significant degree against any subsequent downturns that constitute a greater risk to the higher priced David Lloyd, LA Fitness and Virgin Active chains. |
Posted at 03/12/2019 17:52 by earwacks If brokers are 52% wrong and 49% right seems to be a 1% margin of error. Personally I would say brokers are about 80% wrong in the short term. If you give them long enough they will of course eventually be proved correct more often, 10 years maybe? I think they are a tad cautious here baring in mind how short it is of all time high and considering how the business is expanding and the 'surge in income' compared to its best share price last year.Be interesting to hear how their investor day went at the new 'small box gym' |
Posted at 03/12/2019 17:30 by earwacks Really strange market reaction to good news again. Same thing happened with CDM, great acquisition followed by share price drop and then the next day woosh. Anyone would think the MMs trying to rattle out a few investors knowing they will make a killing the next day. IT does have very strange moves on low volumes and completely indifferent to the wider market usually. It seems to me they are ahead of the game in terms of their approach to what customers want and need and what they offer. Cant see how borrowing an extra ten million on better terms and opening a new venture, which could be ground breaking, can be seen as anything than positive |
Posted at 05/2/2019 15:58 by quepassa Many small-caps which were hammered in the December market-wide general sell-off are now increasingly back in growing demand.Investors want to get on board before the market runs away |
Posted at 23/1/2019 11:29 by thomshrike Hi pugugly, pls keep in mind that p/e is misleading on this one, due to the maturity curve of gym vintages (i.e. initial costs of new gyms, time lag until gym maturity, depreciation timing, etc).That's why in this case FCF yield (ex-expansion capex) is a more reliable measure of shareholder return. You get the feeling of how much cash the company would be freeing for investors in case they just maintained their existing estate. |
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