Member Info for Cripes

Stitching together the March 2023 trading statement and this most recent statement IMHO provides a less optimistic outlook than a rather flattering trading update that really just reports rebuilding revenue as a consequence of Covid closures. The March 2023 statement sets out that the performance at that time was “uneven….vs Board expectations”. The June update reports a reduction in membership from 890,000 at the end of February 2023 to 867,000. This 13th June trading statement also reports a small slowdown in revenue growth from 18.7% to 18.5%. Most tellingly the TS does not undo the March 2023 statement from the Board that additional year on year revenues would be offset by increased costs. I see the most recent share increase as a reflection of the sentiment that naturally arises when a company reports revenue alone without any cost update. I assume that the reports in March of a slowdown in new site openings is a nod to the increases in the cost of money which will curtail any aspirations to grow their way out of a tough revenue environment until the cost of borrowing reduces. Cups and handles aside.....Caveat emptor.

Its kind of a national trend that gyms tend to be busier over the January/February period. The challenge for the gym group is that members can leave at any point and so after the initial motivation fades members leave. Maybe look at other trends like the three year SP chart, the increase in shorts, the macro economic environment, or the current SP at a three year low to inform share buying decisions? Alternatively, yes, by all means do a head count at your local gym or the 210 others?????? All IMHO.

Share rising on hopes of an offer to take this private IMHO. Not the first failed float of a leisure proposition and no badge of honour for the CEO to leave with a substantially larger estate than at the time of floating but with a reduced SP! Bringing the old CEO back, who has overseen this declining performance is not going to instil much market confidence either.

Did you read the RNS. There is a table that sets out their holdings before and after the RNS. The instruments are shorts. DYOR

Lion Trust reduce their long and increase their short.

I keep reading back the Gym Board quote below. It refers to the proposition being more attractive in the CURRENT consumer environment? But their income is 7% down compared with pre covid levels. So in THIS consumer environment their proposition is worth 7% less in relation to turnover. So, each units cost are up, utilities et al, and income down by about £50,000 a unit. But they’re opening more?? I would have thought they should address the weaknesses in their proposition before pressing on with more openings? My own view is that the prime new sites have been taken and any new openings are likely in smaller catchments… Abingdon a recent new opening is one example of this. IMO DYOR

Cash call coming or an 0.80pps low ball offer?
DYOR

I remember the Carillion Board saying that.

New openings normally come with a negotiated rent free period. There. An upside. (But most gyms still lose money year one and two)

New openings aren’t going to help IMO. New openings lose cash over the first year or two as membership numbers grow.

Banker2. Can you explain the upside argument please?
I’m comfortable with my short.

Wow. You would think they could get that right wouldn’t you? Any other adjustments the reader should make to this report??
Big pressures on the 3.2 million mortgage holders whose fixed rates are coming to an end could also see folks donning their track suits and pounding them pavements.
It’s a swirling toxic storm that might be difficult to survive.
Where is the potential upside? I don’t think headroom in price/fees works in the current economic environment. Operators have to notify direct debit payers of any increase and those letters often just serve to remind those that have memberships, that they are not using, to cancel!
A few weeks ago I said sub quid soon….But do top up!
DYOR

Accepting that they have a less labour intensive model than other operators they will still have payroll pressures.
If it snows heavily in January this could be pushed over the edge….

I’m sure Betamax were achieving their production targets too.
More openings likely means more debt and debt interest. And that debt is going to get more expensive.
Lights out soon. Leave key under mat.

Todays trading update: It looks to me that these numbers just don’t add up. 220 openings in the year? Total number of gyms? Nonsense.
Careless reporting is really unhelpful. Opaque at best.

Re RNS of today. Ameriprise seem to agree with me.
Very little comment on this board; reflective of the lack of holders!
Perhaps with Ferdinand leaving they could tap up Arsenal for Jesus? Might be the only one that can help?

Lots of debt, that’s getting more expensive when it comes to refinancing, doubling utility bills (even with government assistance) and a proposition that has appeal to that part of the country that is hardest up. Oh dear oh dear oh dear. And then Ferdinand hangs up his boots…..disastrous.

But do your own research!

costs are largely fixed? You mean like utility costs? This is going to rank further when those costs start to be reported.

Anyone following Malcys blog would read today that he still believes there is long term value here. His blog mentions the contract award today and doesn’t mention, at all, todays shenanigans.

Wait for the big UT at close!