Former executive at David Lloyd Leisure Ltd
- Membership volume outlook and pricing trends for 2023, highlighting cost of living crisis headwinds
- Cost pressures and related impacts on margins and pricing, including labour, energy and maintenance
- Competitiveness and quality of David Lloyd Leisure’s estate vs peers and associated CAPEX requirements
- Expansion and consolidation outlook for David Lloyd, highlighting key opportunities outside the UK
What is your outlook for membership volume growth in H1 2023 for David Lloyd Leisure?
What’s your H1 2023 outlook for churn or membership volume decrease, given the challenge around volume you noted?
You expect higher churn than normal and highlighted members joining after coronavirus. Is that the customer cohort that is most at risk of churning?
Within the family membership, if a family of five with two children or teenagers decides to stop using the gym or the facilities, does that impact the membership price or just mean a loss in volume?
In terms of 2023 potentially returning to a normal year, do you see a risk to David Lloyd from people gradually returning to the office? Is there a risk they’ll churn from their suburban gym locations?
When it comes to the macroeconomic environment, how is David Lloyd positioned for an economic downturn in terms of customer profile? There was some consensus that the upper end or more premium side of the market wouldn’t be as impacted, given the customer base typically has a higher disposable income. Is that not the case for David Lloyd?
Do you think David Lloyd is somewhat proficient in the mid-market to potentially capture downtrading demand? Do you expect any consumers to trade downwards into David Lloyd?
What’s your threat assessment of low-cost operators? How big of a threat can they become in the short vs long term? How should we think about the inflection here?
In the long term, it seems the David Lloyd brand is becoming a little outdated. Is there anything the company can do to turn this around and appeal to the millennial cohort it might be missing out on?
What other short-term impacts to the top line drivers would you note? What are your expectations for membership pricing in H1 2023, or the whole year?
What are your thoughts on David Lloyd’s strategy to premiumise its existing memberships? Can the company successfully continue to premiumise the member base?
You mentioned new members being relatively flat in terms of pricing. Do you expect any changes to subscription or receivable timelines in terms of upfront payment, discounts or anything that might impact the typical cash flow?
Have you observed any increased level of discounting generally in the sector that could pose a threat to David Lloyd’s current membership structure?
Could you recap your thoughts on the magnitude of inflationary pressures for David Lloyd, if it’s possible to do it on a per-club basis? What is the company’s exposure to key drivers and how are these costs trending?
When it comes to maintenance cost – excluding upgrades, just overall running of the clubs from a maintenance standpoint – is that CAPEX significant?
Aside from pricing, David Lloyd has indicated a cost-saving programme. Where do you think the key opportunities are for the company to save costs?
Is there any scope for David Lloyd to drive ancillary revenue streams in its clubs? What’s the opportunity to drive other streams beyond the subscription revenue?
You said David Lloyd’s personal training strategy was approached in the wrong way. Could you elaborate on this? What would be the right personal training strategy?
In terms of post-pandemic member behaviour, have you observed any difference in usage patterns or visit frequency?
Does David Lloyd have a big opportunity to drive volume and potential additional revenue with aggregators?
You mentioned 30-40 out of the 110 David Lloyd sites in the UK need refurbishment. Do you have a rough estimate of associated CAPEX requirements? If we assume the company will focus on the GBP 3m-6m in the top EBITDA clubs, how should we think about an average cost to refurbish a club?
Do you think David Lloyd can push out the refurbishment cycle without impacting its top line? What is the direct benefit to the top line when you refurbish a club?
What’s your outlook for David Lloyd’s site growth in the UK over 2023? I think the target for openings was four per annum with two in the UK. Do you think this is realistic?
David Lloyd has alluded to moving to a turnkey development model to incur lower costs. Do you have any thoughts on the associated growth CAPEX required for fit-outs in this model?
What’s your assessment of David Lloyd’s European growth ambitions? How should we think about Europe in the mid-to-long term for the group?
Is there an inherent challenge in being present in multiple geographies? It seems the wellness and exercising culture differs from country to country in Europe. Is that connected to the lack of success?
Could you walk us through your consolidation expectations for the health, sport and leisure sector in the next few years?
Gain access to Premium Content
Submit your details to access up to 5 Forum Transcripts or to request a complimentary one week trial.
The information, material and content contained in this transcript (“Content”) is for information purposes only and does not constitute advice of any type or a trade recommendation and should not form the basis of any investment decision.This transcript has been edited by Third Bridge for ease of reading. Third Bridge Group Limited and its affiliates (together “Third Bridge”) make no representation and accept no liability for the Contentor for any errors, omissions or inaccuracies in respect of it. The views of the specialist expressed in the Content are those of the specialist and they are not endorsed by, nor do they represent the opinion of, Third Bridge. Third Bridge reserves all copyright, intellectual and other property rights in the Content. Any modification, reformatting, copying, displaying, distributing, transmitting, publishing, licensing, creating derivative works from, transferring or selling any Content is strictly prohibited