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The Gym Group PLC (LSE:GYM) experienced a notable increase of over 9% in its share price on Wednesday morning, following an upward revision in its full-year guidance driven by strong performance across all areas in the first half of the year.
The company now anticipates a 5% to 6% rise in like-for-like revenue for 2024, surpassing the previous guidance of 4% to 5%. Additionally, pre-tax earnings, excluding normalized rent, are projected to hit the upper end of market expectations, ranging between £42.4 million and £44.0 million.
This optimistic outlook follows a 12% increase in revenue to £112.1 million for the six months ending in June. Adjusted earnings, excluding normalized rent, also saw a substantial 28% rise, reaching £22.1 million. Furthermore, statutory post-tax profit turned positive, shifting from a loss of £6.1 million in the prior year to a profit of £0.2 million.
Chief Executive Will Orr attributed these improvements to the implementation of a strategic plan initiated in March, which focused on enhancing returns through customer acquisitions and retention, along with a reduction in promotional activities. Orr remarked that the company's market-leading proposition has become more appealing in a growing market, as evidenced by increased membership, revenue, and profit.
The Gym Group has opened seven new gyms this year, positioning itself to add 10 to 12 new locations in 2024 and approximately 50 over the next three years. This expansion is expected to be supported by a significant increase in free cash flow, which rose 73% from £14.2 million to £24.5 million in the first half of the year.
Shares in the company rose by 9.4% following the updated guidance and strong performance report.
