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magazineGym Group faces macroeconomic headwinds and consumer behaviour shift
Shares in low-cost no-contract gym operator Gym Group (GYM:AIM) remain close to March 2020 lows due to a slower than expected recovery in memberships post-Covid and high utility costs.
Like-for-like sales and earnings before interest, tax, depreciation and amortisation (EBITDA) remain below pre-pandemic levels. The company blames an uneven start to 2023 on macroeconomic headwinds and behavioural changes.
A year ago, consensus analyst expectations were for the company to turn a net profit of around £23 million for 2023 according to Refinitiv data. Today the consensus is calling for a £5.5 million loss.
After opening 28 new sites in 2022, its highest ever, the firm intends to take a more measured approach in 2023 targeting 12 new sites, fully funded from internal cash flow, down from 20 sites previously guided.
The new plan will ensure the company remains within its targeted leverage range (net debt to EBITDA) of 1.5 to two-times. The business ended 2022 with net debt of £76 million equal to two times EBITDA.
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Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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