The Gym Group shares sink more than 10% after unveiling plans to hike prices for customers this year in response to surging energy costs
- The Gym Group shares fell sharply today amid price hike revelations
- The group saw its membership levels surge over the past year
The Gym Group has revealed plans to hike prices for customers across its sites amid soaring costs.
Rapidly rising energy costs, which are hitting millions of businesses and households up and down the country, look set to add £2mllion to the group’s utility bills this year.
The Gym Group shares sank today, falling over 14 per cent at one point before settling at losses of around 8.64 per cent or 18.80p to 188.20p this afternoon. Its shares have fallen over 23 per cent in the past year.
Price hikes: The Gym Group plans to hike prices for customers amid soaring costs
Customer packages at the group start from around £15.99 a month, and although it did not unveil the level of any price hikes, they look set to kick in during the second half of the year.
The Gym Group said it is £4 cheaper than local competitors and is retaining price leadership in the market.
The Gym Group saw membership levels increase by more than 170,000 last year to reach 718,000 as the UK emerged from multiple lockdowns, exceeding pre-pandemic levels.
The group saw revenue climb 31.7 per cent to £106million last year, while pre-tax losses fell from £47.2million to £44.2million.
The Gym Group said it plans to open 28 new sites this year, adding that it had already exchanged on 20 leases.
Richard Darwin, chief executive of The Gym Group, said: ‘The Gym Group has had an encouraging start to the year, building on the momentum of our excellent recovery in 2021.
‘We have now grown our membership by 50 per cent in the 12 months to February 2022.
‘Our rollout programme is accelerating with a further 28 openings planned in 2022, increasing the number of communities that can access our high quality, great value gyms.
‘We are confident that our high margin, low-cost business model and our yield optimisation strategy will help to mitigate the impacts of the current inflationary environment.
‘Our pace of change is accelerating through the launch of a new technology platform and a brand transformation in 2022 as we position our business to take advantage of the many growth opportunities within the low cost gym market.’
Susannah Streeter, an analyst at Hargreaves Lansdown, said: ‘The snap back to pre-pandemic fitness habits should help give The Gym Group the elasticity it needs to cope with rising costs, with membership rates rising by almost 15 per cent since the start of the year as the omicron shock receded and restrictions eased.’
She added: ‘Our quest for fitness should also help the group regain its hefty pandemic losses, a trend evidenced by sports bras entering the inflation shopping basket this week.
‘The risk is that some locked down habits stay locked in and former gym goers keep working out in a new kit in virtual classes instead.’