The Gym Group, one of Britain’s largest operators of low-cost gyms, has opened talks with lenders after reporting that revenues almost halved last year and member numbers plunged by more than 200,000 due to the pandemic.
The company, which runs 184 gyms across the UK, said revenues fell by 48% year on year from £153m to £80.5m as pandemic restrictions across the UK cost it 45% of trading days last year.
The company, which on Friday announced that former footballer and TV pundit Rio Ferdinand was to join its board as a non-executive director, has opened talks with its lenders as the latest national lockdown stretches its finances.
The company said that while its has “significant liquidity” with its £100m banking facility, it needed to extend the financial covenants. Net debt stood at £47m at the end of last year.
“Given the ongoing impact from the latest lockdown and its implications for the operational reopening of our gyms, we have started discussions with our lending banks, who continue to be supportive, to review the future covenant tests relating to this facility,” the company said.
The Gym Group said that as of the end of 2020 membership numbers had fallen by more than a quarter year on year, from 794,000 to 578,000. The company, which froze gym subscriptions during the national lockdown so members don’t pay while sites are closed, added that it had no students members remaining from its 2019 sign ups. The average monthly headline price for a membership was £18.81 in December.
“2020 has been a challenging year for our business, our members and our colleagues,” said Richard Darwin, the chief executive. “Our cash management during the pandemic has ensured we ended 2020 with manageable levels of debt and significant liquidity. At a time when health and fitness has never been more important to the nation, we are ready to emerge from the pandemic and take advantage of the many opportunities available to us.”
The company said the monthly cash burn during the current lockdown was running at £5m, lower than the £6m during the November lockdown due to the recent government grant support.
Despite the pandemic the company recently opened its 184th site, and a total eight new venues last year and is progressing on three more.
The group said the pandemic had also provided opportunities to snap up locations with cheap rentals as the pressure mounted on high street landlords.
“The company continues to see an opportunity to access excellent new sites at attractive rents,” it said. “We are building a strong pipeline for 2021 and beyond, and we will continue to progress new leases during this current period of lockdown. We will determine the timing of the rollout programme once there is greater visibility about a reopening date for gyms.”
