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02 Dec 2023
PureGym ramps up expansion after strong quarterly results
BY
Kath Hudson
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PureGym has grown its membership base
photo: Pip Rustage BJL PureGym
PureGym has delivered a positive set of third quarter results, with revenues increasing to £137.7m, for the three months ending 30 September – up 15.8 per cent on Q3 2022 (£118.9m). This was partly due to a 14.9 per cent increase in members and a 2.2 per cent increase in average revenue, thanks to price increases and the maturation of existing gyms.
Revenue increased by 16.4 per cent to £409.3m for the nine months, an increase of 16.4 per cent on the same period in 2022 (£351.7m). The average revenue per member was also 3.9 per cent higher over the course of nine months.
Operating expenses increased by 8.6 per cent to £78.7m for Q3 (£72.4m Q3 2022) and by 12.8 to £239.6m for the nine months, due to an increase in corporate owned sites, an inflationary uplift in operating costs and investments in head office for the next phase of growth which were flagged at the half year, although actual head office costs fell by 9 per cent in Q3.
PureGym is investing £10m in green tech to deliver a 20 per cent reduction in energy costs further down the line. Despite this capex, the company appears to be engineering down the cost of developing its clubs.
The number of members is up year-on-year, showing membership growth is accelerating across the group, despite the company opening smaller sites in the UK, indicating that PureGym's overseas clubs may be taking on more members.
ARPMM is £24.49 for Q3, vs £24.56 for the nine months – student discount might be a factor in this, although in 2022 it was higher in Q3 than for the nine month period.
Overall losses for the nine months were £42.6 million, vs £60.5m last year. Losses for the three months to 30 September were £19.2 million – down from £42.6 million last year.
CEO of PureGym Group, Humphrey Cobbold says: “We've delivered a strong Q3 performance, with 44 per cent growth in EBITDA driven by the ongoing recovery of base membership, good cost control and maturation of existing sites.
"We were delighted, this quarter, to complete a successful refinancing giving us a strong financial platform from which to further our expansion. We remain on track to open 43 sites by the end of this calendar year and – despite a challenging backdrop – see significant opportunity both in our core markets and further afield.”
PureGym is the UK’s largest private gym operator by number of gyms and members. As of 30 September, the Group operated 362 UK gyms (Q3 2022: 317 gyms) and had 1,465,000 members (Q3: 1,216,000.)
The company is also the biggest operator in Denmark with 167 gyms; the second largest in Switzerland with 44, and has stuck a flag in the US market with its first three clubs branded as Pure Fitness. Franchising is underway in Saudi Arabia and UAE with 19 sites in the Middle East.
With a £805m raise in September, PureGym is planning to fund significant expansion in the UK, Switzerland, the Middle East and other attractive markets. Cobbold, says this deal gives the company a competitive advantage over resource-constrained competitors, although the raise has significantly pushed up interest payments.
The impact of these increases will play out over the next few quarters once the impact of things such as interest income and tax credits have worked their way through the system.
Speaking in this month’s HCM, PureGym MD, Rebecca Passmore, said the company is working on making the affordable model work in smaller locations and eyeing expansion into rural areas, saying: “We’ve found a viable model with an addressable population of 30,000 to 40,000. We’re working to become viable at 1,500 members and if we could make this work, it would give the property team more markets to target.”
To read these and other comments on the rural health club development, click here.
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