The Gym Group PLC (LON:GYM) shares moved higher on Thursday after the no-contract gym operator managed to deliver results for 2020 that were less bad than feared as coronavirus (COVID-19) restrictions forced the closure of its estate for most of the year.
In its results for the year to December 30, 2020, the company said 45% of its trading days had been lost due to closures, which when coupled with lower levels of membership during the pandemic had resulted in a 47.4% decline in revenues to £80.5mln.
READ: The Gym Group cuts monthly cash burn to £5mln with government support
The massive plunge in trading also caused the firm to swing to an adjusted pre-tax loss of £46.5mln compared to a £14mln profit the year before, although it said that its low levels of debt and low-cost base had enabled it to be cash flow positive when its gyms were open.
Looking ahead, the company said it had seen higher levels of membership retention during the current UK lockdown versus previous closure periods, with memberships at 547,000 at the end of February versus 578,000 at the end of December.
The firm said its cash management focus meant it will be able to re-open its gyms in “a position of financial strength”, with gyms expected to be allowed to reopen in England on April 12 and in Scotland from April 26.
Three new sites are also due to open in April and one in May, the company said, with an additional four starting on-site imminently while another six leases have been exchanged with several more in advanced negotiations.
"During 2020 we demonstrated the resilience of our business and its culture even in the most challenging of times. By freezing subscriptions when closed and by providing an excellent COVID-secure environment in our gyms when open, we have retained most of our members; by supporting colleagues with topped-up furlough pay, honest communications and a comprehensive wellbeing plan we have high levels of staff retention and engagement; and by managing cash carefully we will emerge from the crisis with manageable levels of debt”, Gym Group chief executive Richard Darwin said in a statement.
“We are ready to start rebuilding our memberships levels and growing our estate from 12 April, extending affordable fitness at a time when health and fitness has never been more important", he added.
In a note on Thursday, the company’s house broker Peel Hunt retained their ‘buy’ rating and 300p target price, saying the results for the year were “slightly better than expected” and that property market conditions were “ideal” for the firm to expand.
“[The Gym Group’s] position as an anchor tenant should be even stronger post-pandemic, benefiting from relatively low leverage and high disclosure, making affordable health & fitness available to an increasing share of the population”, the broker added.
Shares in the company rose 2.7% to 246.5p in late-morning trading.