Fitness regimes were an early casualty of the lockdown. It is so much easier to switch on Netflix than swing a kettlebell. Gyms, too, have stumbled. In the US, 24 Hour Fitness and Gold’s Gym both fell into Chapter 11. In the UK, shares in The Gym Group have slumped as fitness centres burnt through cash. Now that gyms are reopening, how quickly can they get back into shape?
Fitness is big business, generating sales of $97bn globally last year, according to the International Health, Racquet and Sportsclub Association. More than 64m Americans belong to at least one of the nation’s 41,000-odd clubs. In the UK, the industry has doubled in size this century.
Lockdown brought that to an abrupt halt. Gyms brought down the shutters. Many froze member fees. Some launched apps, but these proved a poor substitute for lost revenues. Even where governments paid wages, the leased equipment and other costs meant gyms steadily lost money: a monthly £10m in the case of The Gym Group.
Gyms are no stranger to wavering fortunes. Les Mills, whose fitness regimes are staples at clubs around the globe, illustrates the point. The New Zealand-based group was wiped out by the stock market crash of 1987 three years after it listed. In its half century of business it has struggled under massive debt loads, racked up failures in both clothing and nutrition businesses, and overestimated fitness clubs’ ability to spend on its kit.
Expect some winners to emerge leaner and fitter. Germany’s RSG Group has bid for Gold’s Gym. Fitch sees budget gyms as the first to return to form. Look at The Gym Group, which had just shy of 700,000 members in early July, 80 per cent of its pre-lockdown base. The group says it breaks even on 60 per cent, putting it in good shape when its 170-odd gyms start to reopen later this month. For the rest, strains will lead to consolidation. Investors, like fitness buffs, should keep hitting the gym.
This has been amended to clarify PureGym is not listed
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