Gym Group insiders sell £1.8m

Gym Group’s (GYM) founder, John Treharne, sold £1.3m worth in shares towards the end of March, a sale that was made alongside a £0.5m disposal by non-executive independent director Paul Gilbert.

Gym Group did not offer a formal comment on the sales. Yet while Treharne has cut back his holding by around a fifth, his total stake still stands at 1.26 per cent (according to data compiled by FactSet), making him the company’s second largest non-institutional investor. Meanwhile, Gilbert is preparing for retirement from the board, which may well have motivated his decision to sell his entire holding.

Either way, there could be re-rating potential in the shares. Gym Group is one of the few businesses that looks like it could thrive when lockdown restrictions lift on non-essential retail and gyms on 12 April. Almost all of its current members say that they expect to return to the gym as soon as possible, with three-quarters stating that fitness will be more important to them than it was before coronavirus hit. 

That is not to say that the pandemic has not been a strain - limited trading meant net debt, excluding lease liabilities, had increased by around a fifth last year. Including its expensive estate, net debt stood at £352m at the end of December. Yet its sprawling network of gyms is still growing, with four new sites scheduled to open by the end of May.  Management said last month that it expects to be close to cash flow break-even when the gyms reopen, which should put it in good stead to capture the pent-up demand for out-of-home exercise. Hold at 246p.

Last IC View: Hold, 248p, 18 Mar 2021