Low-cost fitness club chain The Gym Group PLC (LON:GYM) flexed its muscled on Tuesday as it reported another year of “rapid growth”.
Revenue swelled by 36% to £123.9mln in the 12 months ended 31 December (2017: £91.4mln), while adjusted profit before tax jumped 19% to £14.4mln (2017: £12.0mln).
READ: GymGroup weighed down by high debt predictions
The growth was driven by a surge in membership numbers and 30 new gym openings, including the 13 received as part of the £25mln acquisition of easyGym last summer.
As many as 20 new sites are slated to open in 2019 as Gym Group looks to take advantage of the low-cost gym market which is expected to double in size within the next seven years according to PwC.
“During 2018 we accelerated our growth to reach 158 gyms, delivering rapid increases in revenue and profits as well as important projects to support a business of scale in the longer term,” said chief executive Richard Darwin, who took over from founder John Treharne in September.
He added: “January and February are peak months for new memberships. We have had a successful start to the year and our brand now serves over 800,000 members with 10 million visits already so far this year.”
The board proposed a final dividend of 0.95p per share, giving a full-year payout of 1.30p (2017: 1.20p).
Liberum ‘reassured’
“The outlook for 2019 is reassuring with a 9.5% boost in membership numbers to 793k in the first two months of the year,” said Liberum, which has the stock as a ‘buy’ with a 330p price target.
“We expect the LIVE IT premium pricing model to continue to gain traction (13.5% of members by February), and the roll-out of the PT model to progress well.
“A small box format gym is another exciting development and shows the continual evolution of The Gym and lowering development costs which continues to shape the industry.
“There remains significant scope for expansion as gym membership becomes democratised.”
Shares jumped 6.1% to 214.9p on Tuesday.