Affordable Fitness Clubs: Empowering Strength

PureGym has released its financial results for the year ending December 31, 2023. Their affordable gym model has gained wide popularity over the years, and according to the group, the demand for health and fitness is at an all-time high.

Insider examines PureGym's financial performance, strategic direction, and how the low-cost gym model is performing in the current market.

About PureGym

With over two million members and more than 600 gyms worldwide, PureGym operates corporate-owned locations in the UK, Denmark, Switzerland, and the USA. They also have 20 franchise locations in Saudi Arabia and the UAE.

Founded in the UK in 2009, PureGym offers affordable fitness clubs where members pay a monthly fee without long-term contracts, differentiating it from many traditional membership-only gyms.

Most PureGyms are open 24/7 and offer a range of equipment and amenities, including cardiovascular machines, fixed-resistance equipment, free weights, and various classes.

As of December 31, 2023, PureGym has 370 locations in the UK, 164 in Denmark, 44 in Switzerland, 3 in the USA, and 20 franchise locations in the Middle East.

Key Highlights for 2023

Despite facing a "tough inflationary environment," PureGym achieved significant financial, operational, and strategic progress in 2023. Here are some highlights from their year-end results:

• The group expanded by opening 54 new gyms in 2023, ending the year with over 600 gyms across six markets globally.
  
  
• Membership grew by 11% across the group and by 16% in the UK compared to 2022.
  
  
• Revenue increased by 15% to £549 million, up from £476 million in 2022, driven by new gym openings, increased membership, and higher average revenue per member.
  
  
• The company maintained tight cost control, keeping like-for-like (LFL) cost inflation below 5%.
  
  
• Revenue growth and cost control led to a 39% increase in Adjusted EBITDA from 2022.
  
  
• £42 million was invested in maintenance and refurbishment to keep gyms at high standards.
  
  
• PureGym ended the year with £140 million in cash and £315 million in available liquidity.
  
  

The Gym Group, another low-cost fitness giant, reported an 18% increase in revenue for the same period, with an 8% rise in average membership.

 They also noted a significant increase in free cash flow, from £16.7 million in 2022 to £27 million in 2023, which funded six new sites, enhancements to existing ones, and technology projects.

Low-cost gyms in the UK continue to perform robustly. In a Q3 2023 report, PureGym highlighted its disruptive customer proposition, which appeals to a broad range of consumers and differentiates it from traditional gym operators.

"The world's population is more conscious than ever of the importance of looking after physical and mental health," the group stated.

Offering a full-service gym at an affordable price makes fitness accessible to a larger segment of the population. PureGym's "no-contract" model, similar to those of JD's and The Gym Group, is more appealing than traditional gyms.

PureGym's always-open, fully equipped, and well-maintained facilities are difficult for consumers to replicate at home or elsewhere.

CEO Remarks

Humphrey Cobbold, CEO of PureGym Group, commented on the results:

"2023 presented challenging business conditions with rising inflation, high interest rates, and energy costs, along with political uncertainty affecting consumer sentiment and our business directly.

"Against this backdrop, our results and progress are outstanding, demonstrating growth in all key financial metrics, substantial expansion, a highly significant refinancing, and meaningful deleveraging.

"Our proposition—providing accessible, flexible, and affordable fitness—continues to be extremely attractive given growing awareness of the need to look after physical and mental health, and with cost-conscious consumers seeking out the best value.

"As a result, we have seen robust demand in our core estate, with the volume of gym visits back to pre-pandemic levels. This has been further supported by the phenomenal performance of new site openings, particularly in the UK, where we have successfully identified pockets of underserved demand.

"Above all, I am proud that PureGym has facilitated over 125 million gym visits in 2023, contributing a significant benefit to the physical and mental well-being of millions of people."

Source: insidermedia

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