SHARES in LA Fitness edged up 3½p to 104½p yesterday after the health and fitness club operator reassured investors that it would not breach its banking covenants.
In an upbeat trading statement ahead of full-year results, Fred Turok, chief executive, said that trading was robust given the difficult market conditions and he insisted that the group was on track to meet analysts’ pre-tax profit forecasts of £7 million.
Analysts were concerned that the company may struggle to meet its banking obligations after a profits warning in February. But Mr Turok said that despite the investment of £18 million opening nine new clubs in the second half, the group’s finances were secure.
LA Fitness is now the only health and fitness operation quoted on the Stock Exchange after a series of buyouts. Cannons and Esporta both recently left the market, while Holmes Place is still finalising a deal to go private.
Mr Turok insisted that he remained committed to retaining the company’s listing, arguing that there was plenty of room for share-price growth: “Our valuation is still half what it should be, compared with other companies in the sector, so we have at least another 100 per cent to go.”
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Although the shares have soared from 54p to above 100p in the past four months, they remain well below their peak of 243½p last year.
LA Fitness added that its membership had risen from 125,000 people a year ago to 160,000. Mr Turok said that the group’s retention rate and pricing also remained in line with expectations.