Gym Group upgrades outlook as Gen-Z shuns heatwave and World Cup

Gym Group has upgraded its outlook after successfully attracting Gen-Z customers to its gyms during the summer months, despite competing distractions such as the World Cup and multiple heatwaves. CEO Will Orr stated that the company remains on track to achieve three percent sales growth, despite a challenging macroeconomic environment.

Orr emphasized that people have integrated gyms and fitness into their daily lives, making them an essential part of their routines. The London-listed group reported a £4.3m pre-tax profit in the six months to June, a 48 percent increase from the previous year, as revenue rose by 10 percent to £133m. Gym Group upgraded its earnings guidance on Wednesday, projecting to deliver at the top end of its £60.5m to £62m range.

The company expects Gen-Zers to prioritize fitness in their discretionary spending, especially as the cost-of-living crisis puts pressure on their budgets. Over half of young people (55 percent) now consider health and fitness either their first or second spending priority, up from 44 percent last year, according to the firm's research.

Before the first Budget under new Prime Minister Andy Burnham, Orr called on the government to provide a stable business environment. He urged the new administration to deliver a pro-growth agenda to support the company's expansion and contribute to the nation's health and economic growth. Gym Group has warned against further radical changes to the tax system, as former Chancellor Rachel Reeves' business rates raid last year did not significantly impact the company.

The budget gym provider recently increased its average membership rate by £1.81 to £26.91, with most of the hike necessary to keep up with inflation. Orr stated that the value for money remains high, and the company is continuously adding value by modernizing its facilities and equipment. Gym Group opened four new sites in the first half of the year and anticipates opening at least 20 more by 2026.

Analysts at Deutsche Bank praised the company's strong execution alongside a supportive market environment and their self-financed, value-creating rollout strategy.