Management of UK-based budget gym operator Pure Gym struck a triumphant tone on this morning's (26/08) earnings call, providing their market outlook and strategic plans - usually saved for year-end calls - with no concern raised about the prospect of additional lockdowns. All of the company’s gyms have now reopened both domestically and abroad (some still with capacity constraints) with revenue and membership numbers for June at 99% and 91% of June 2019 levels, respectively. The group teased they are exploring capital raising options to capitalise on structural tailwinds and deleverage, with the FT reporting this morning the mulling of an IPO, although management declined to go into any more detail on its preferred capital raising options, citing commercial sensitivities.

Management also revealed plans to expand internationally into Asia and the US, with initial plans to open four franchise sites in the Middle East and Egypt by the end of the year, before opening three trial sites in the States late 2021/early 2022. When probed about the nature of the agreements, management told investors it was a fairly standard arrangement, receiving upfront royalties and annual fees per sites, in addition to a monthly revenue cut in the region of mid to high single digit percentages.

Flex-ed muscles 

Average revenue per member (ARPM) was up ~9% vs June 2019 to offset a drop in total members, and saw revenue practically recover to pre-covid levels.