Gym Group (The) PLC (LSE:GYM) (H1 2026) Earnings Call Highlights: Revenue Tops GBP133 Million ...

Negative Points

• Like-for-like revenue growth was only 3%, with member volume maintained but not growing, partly due to a 1-2% drag from competitor rollout.

• Site cost inflation remains a headwind, with like-for-like site costs up 3.5% in H1, though expected to slow in H2.

• The new site rollout is heavily back-weighted, with only 4 gyms opened in H1 and 11 on site, putting pressure on delivery teams to meet the 20-gym target.

• Central costs increased by 7%, and non-underlying costs of GBP1.5 million were incurred for system upgrades, impacting statutory profitability.

• The company has a small number of loss-making sites, with plans to close one or two per year, indicating some operational challenges in the estate.

Q & A Highlights

Q: Jack Cummings of Berenberg asked whether the company's low leverage of 1x against a 2x target, combined with the current buyback being well advanced, could mean an additional buyback at the full-year results. A: CFO Luke Tait said the increased facility size this year gives the opportunity to do another buyback next year, and as long as the company keeps investing at an appropriate pace in higher-ROIC areas while leverage stays low, there is a good chance it would "go again" next year.

Q: Douglas Jack of Peel Hunt asked how many enhanced-format refurbs the company might do next year and what the typical cost is, plus its preferences on site size and location for expansion. A: CFO Luke Tait said the company is sticking to its capital allocation policy of 6% of revenue for refurbs, but with revenue rising that implies "25% plus" next year, with an option to go faster once 30% ROIC is consistently delivered. CEO Will Orr added that site availability remains strong, with the core format staying at roughly 14,000-15,000 sq ft in Greater London and urban locations, supplemented at the margins by smaller-catchment and larger 20,000 sq ft destination sites.

Q: Anna Barnfather of Panmure Liberum asked how mature-site ROIC and refurb ROIC are calculated. A: CFO Luke Tait confirmed mature-site ROIC is still calculated on the original capital investment, while refurb ROIC is incremental EBITDA on incremental CapEx.

Q: Anna Barnfather of Panmure Liberum asked whether the company has any loss-making sites and what action plans exist to address them. A: CFO Luke Tait said the loss-making tail is very small literally a handful of sites and the company has been closing one or two a year as leases expire, with two closures expected this year.

Q: Ross Broadfoot of RBC asked what being in the "magic blue corridor" would mean for pricing versus the ~GBP27 headline rate, and what the primary aim of the refurbs is. A: CEO Will Orr said the refurbs have multiple aims: a 30% return on refurb capital, supporting member volume, supporting pricing, improving member experience, and keeping the estate competitive and sustainable long term. CFO Luke Tait added that the company has taken reasonable pricing increases for years without moving into the corridor, giving confidence in a decent long-term pricing opportunity.

Q: Jack Cummings of Berenberg asked how the company decides which sites to refurbish, and whether rising visit frequency and tenure could support faster than 3% like-for-like growth. A: CEO Will Orr said selection is multidimensional, combining a statistical model built with Simon-Kucher to assess volume headroom, trade and competitive dynamics, and the opportunity to turn a good gym into a great one. On like-for-like, he said the company continues to guide to strong ~3,800 members per gym and yield-weighted revenue growth, with refurbs underpinning that path.

Q: Tim Barrett of Deutsche Bank asked for more detail on peer-to-peer energy and brand awareness investment, and whether there is still volume upside in pre-COVID gyms. A: CFO Luke Tait explained the peer-to-peer scheme involves committing to specific renewable energy producers to reduce commodity rates, and that the brand awareness trial cost less than GBP1 million, with conversion to incremental members still being monitored. CEO Will Orr said the company will continue to guide to holding like-for-like volume, noting a 1%-2% drag from competitor rollout, and would be pleased to beat that.

Q: Nigel Parson of Cavendish asked about gym usage trends between strength and cardio, and whether GLP-1s are affecting how people use gyms and equipment allocation. A: CEO Will Orr said the rise of strength training continues across age ranges, so the company will allocate more space to strength and functional training and slightly less to cardio, while keeping a rounded offering. On GLP-1s, he noted growing penetration, with users turning to gyms to sustain muscle mass and build habits, calling it a strong tailwind for the gym market.

Q: Anna Barnfather of Panmure Liberum asked about the Q4 weighting of openings and whether internal steps can smooth delivery as the company steps up to 25 and then 30 sites. A: CEO Will Orr acknowledged the rollout is more back-weighted this year than he would like, though at least 20 openings are still expected. He said the company has a specific plan to deploy a team now working on early-2027 sites to smooth the phasing next year, though some back-weighting is likely to persist.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .