The Gym Share Discussion Threads

[masurenguy] 27/10/2022 12:36

EBITDA has more to do with operating performance and has really little relevance to debt. The key metric that is relevant to debt is cashflow and, at the interims published a couple of months ago, their free cashflow was only circa £7m.

[hammergaumet] 27/10/2022 10:50

Why would they need a placing to address 55m of debt when they expect ebitda of c 50m this year?

[bionicdog] 09/10/2022 10:36

I bought one as a back up to my Rogue bar and I have to say that I actually prefer it. This finish is better and it's less than half the price. No central knurling and 1mm thinner. The whip only really comes in at very high weights , so I wouldn't use it for bench press at max , but everything else seems fine. The knurling is not nearly as aggressive , but I haven't lost grip yet. Bargain.

[bionicdog] 03/10/2022 10:24

£150 is a good price for this general purpose bar and only £5 delivery. This is not a power bar and will flex.

[masurenguy] 03/10/2022 09:44

Still on the sidelines here. Problem is an interim loss of circa £4m and net debt of circa £55m. The latter makes them vulnerable to further interest rate rises. This is a good business model compared to most of the competition which has higher overheads but they may need a further placing to address the debt before we can see potential for any real upside to the current shareprice.

[sludgesurfer] 03/10/2022 09:28

I'm a buyer sub-£1 here. Now trading at levels not seen since the depths of covid.The market seems to be pricing in many people giving up their memberships as the cost of living bites at a time of significant expansion. Whilst I'd like to see them reign in their growth expectations or at least provide more clarity on the underlying assumptions, I think this is a solid business.Anecdotally, as a member I think they do a decent job although numbers are less that where I thought they'd be now the students are back.

[1cripes] 27/9/2022 14:22

This one’s going private and then a CVA…
Creditors shareholders and landlords beware!
IMHO DYOR

[1cripes] 30/8/2022 08:37

Can this survive the winter? share price sub quid soon.

[george stobbart] 28/4/2022 08:17

takeover target by private equity this one?

[km18] 21/3/2022 14:50

..from last week...

The Gym Group Plc published FY22 results last week. The business enjoyed a solid recovery in 2021 with total members at 31 December 2021 up to 718,000. Revenue was up 31.7% to £106.0m, adjusted EBITDA was up 110.7% to £35.4m, statutory loss for the year was a little lower at -£35.4m. The business was growing briskly pre-Pandemic and is rebounding solidly post-Pandemic. But there is a long way to go to return to pre-Pandemic levels of business, FY19 revenue was £153m. Valuation is also something of a cloud, PS ratio at 3.3 is third quartile for the sector, PE ratio even less attractive. Share price is also in a 9-month correction and still testing the downside. Balance sheet looks a little fragile with net debt of £373m. GYM is a decent and growing business, but it is a share to monitor for the time being...

...from WealthOracleAM

[spob] 20/3/2022 20:11

PureGym chief: keeping faith in the business model

Despite 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 . . . but in this case, I felt we had to stand up and be visible.”

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 . . . This is what a modern gym looks like.”
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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 . . . but it’s not just my way or the highway

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.”

[masurenguy] 16/3/2022 10:15

They raised circa £41m in a placing @150p two years ago after the pandemic struck. 3 brokers were then forecasting a shareprice in the range of 220/300p which was way beyond me at that stage.



I'm sitting on the fence here because I think we are overdue a market downturn, with galloping inflation - just got an email from my energy provider today requesting a 49% increase in my monthly payment. Inflation will also hit car fuel and food costs plus interest rate rises and NI contributions yet to come, thus forcing a lower level of expenditure on discretionary and non-essentail goods and services. That is before you factor in the current Ukranian catastrophe and Russian debt default.

[johndoe23] 16/3/2022 09:38

It's priced for a tech company in a bull market, not saying a bad company but in these conditions the valuation is way too rich. I see markets have recovered somewhat this past week, I'm not convinced the worst is behind us yet.

[masurenguy] 16/3/2022 09:34

On it's own a high PER is not an overwhelming factor. Momentum, forward potential, an established low cost moat model, some pricing power and competitive scenarios also figure in valuations. I hold at least two AIM stocks with PER's in that range and both have more than doubled in price. Have you ever heard of a company called Tesla too?

I exited my position here when the pandemic started so I have no axe to grind but this business has future potential, compared to the far more expensive full service competitors like David Lloyds, especially in such an inflationary environment going forward. I remain out because I think we are overdue a stock market correction but retain them on my watchlist for future investment opportunites.

[johndoe23] 16/3/2022 09:22

Forward pe of around 50 times?

[masurenguy] 16/3/2022 09:21

Would you like to explain why you think that it is "completely over valued" and why you think that "fair value would be around half current share price".

[johndoe23] 16/3/2022 09:17

Completely over valued, fair value would be around half current share price

[steviec1] 16/3/2022 08:08

Nice update today let's see where this ends up ?

[masurenguy] 16/12/2021 07:54

Positive update but current pandemic scenario still will create some short term problems. Former holding, no current position, and back onto my watchlist going forward.

Trading Update

Resilient membership numbers and robust balance sheet

The Gym Group plc, the nationwide operator of 198 low cost 24/7, no contract gyms, announces a trading update ahead of New Year trading.

Current trading

-- Strong recovery in membership numbers following re-opening. Total member numbers grew from 547,000 in February 2021 to 753,000 at the end of October 2021. In line with seasonal norms, membership has since declined to 735,000 as at 30 November 2021

-- Headline prices have continued to increase through H2 2021 with the average monthly price of a standard DO IT membership increasing to £19.23 in November 2021 (vs £19.11 in June 2021 and £18.81 in December 2020)

-- Take-up of the premium multi-site membership, LIVE IT, increased to 27.1% by the end of November (vs 24.7% in June 2021 and 22.5% in December 2020) as the continued growth in number of gyms in the estate adds to the appeal of multi-site access

-- The Company is trading in-line with market expectations for FY2021 for its key profit measure of Group Adjusted EBITDA Less Normalised Rent

Roll-out strategy

-- The Company remains on track to deliver its organic rollout plan targeting 40 new openings in the 18 months to December 2022

-- By the end of December 2021 the Company will have opened 19 sites in the year of which 15 will have opened in H2

-- The current cohort of year-to-date organic sites are performing well and in-line with the mature estate average in terms of membership levels

Balance sheet

-- As at 30 November 2021, the Group had Non-Property Net Debt of £35.9m and £73.6m of liquidity headroom (calculated off bank debt, plus finance lease outstanding, less cash)

Richard Darwin, Chief Executive Officer of The Gym Group, commented: "The recovery in our membership following the reopening demonstrates the essential role gyms play in people's lives. The market opportunity and growth potential for The Gym Group is very exciting. Whilst we are mindful of the near-term uncertain outlook as a result of the new Covid variant, we have the growth strategy, financial resources and expertise required to capitalise on those opportunities, widening access to inclusive and affordable gyms for all over the long term ."

[brummy_git] 17/11/2021 18:18

www.youtube.com/watch?v=wuSukSmxo_g&t=1s


James Thorne of Columbia Threadneedle talks positively about The Gym Group here (38:35)

[investing2retire] 05/11/2021 23:11

closed my short for 20 points profit yesterday as started to bounce off 260p.was a good short term trade anyways.

[danb45] 05/11/2021 11:49

Another one I saw qualifies for the Altman short screen is Marks & Spencer...

[danb45] 02/11/2021 16:38

I suppose on reflection it's not how busy the gym is, it's how many have joined / renewed membership - my bad ! Yeah the stocko figures for GYM are pretty damn bad - on a positive note nearly 50% shares held by funds.As a sector I'd expect it to be a growing one - I suppose that's why I'm bullish but glad to be reminded of risk hete

[investing2retire] 02/11/2021 15:46

shoezone was shorted for a long time and could argue is rising off a bottom. re GYM i may close my short if it rises. was only a short term trade but will see if it drops further. but for me GYM looks to be currently unprofitable with a high level of debt and hence overpriced so doesnt matter how busy the gyms are