Leejam CEO bullish on growth despite Q2 dip

Leejam Sports Co. is optimistic about its growth prospects in the medium and long term, as it continues to expand by opening new centers, CEO Adnan Alkhalaf told Argaam.

The Saudi-listed company currently has over 70 centers in design and construction to alleviate the short-term impact of its expansion strategy, Alkhalaf added.

The CEO noted that the company’s financial performance for the first half of 2024 met its expectations, with Leejam reporting a 19% year-on-year (YoY) rise in revenues and stable profit margins.

This achievement came despite increased costs and expenses from the launch of 20 fitness centers, as costs are incurred immediately when a new center opens, while it takes time for revenues to reach normal levels.

Alkhalaf explained that the second quarter of 2024 coincided with the Eid al-Fitr and Eid al-Adha holidays, which are typically low seasons for subscription sales.

In response, Leejam launched several campaigns and promotions from the second quarter to the first quarter of this year as a proactive measure to address these weak periods.

The CEO highlighted that the prominence of Leejam’s Xpress fitness center brand surged in Q2 2024. It is expected to return to normal levels following the opening of the traditional centers currently under construction.

The second quarter also saw an increased focus on the launch campaigns of the new centers inaugurated since Q4 2023 to accelerate growth in their revenues, subscriptions, and thus profitability.

Alkhalaf pointed out that Leejam mitigated the temporary cost impact of opening 20 Fitness Time centers over the past year amid elevated kick-off operations for the new centers.

Leejam's latest financial results included expenses related to new investments in various areas, such as physical therapy centers, which are still in their early stages, as well as one-time expenses related to the closure of two centers in Jeddah.

By the end of Q2 2024, Leejam operated 180 Fitness Time centers (130 for men and 50 for women) with 428,000 memberships (336,000 men and 92,000 women).

He emphasized that the men's branches in the Central Province continue to contribute the most to revenues due to their higher share compared to other regions.

The promotional campaign for students and summer programs was part of the company's strategy to reach all target segments through various means. The discount offers were initially successful but are still in their early stages.

Regarding the third-quarter performance, Leejam will continue to expand and open new centers until year-end, consistent with the progress made in implementing its 2025 plan, Alkhalaf concluded.

According to data compiled by Argaam, Leejam reported a 24% increase in net profit for H1 2024, reaching SAR 167 million, up from SAR 135 million in the same period last year. Its second-quarter income was SAR 73 million.

Source: argaam

The opinions shared in the GymNation blog articles are solely those of the respective authors and may not represent the perspectives of GymNation or any member of the GymNation team.