Leejam CEO says outlook for future growth rates positive; Q2 results hit by seasonality

The Saudi-listed firm has more than 70 centers under design and construction as it seeks to mitigate the short-term impact of the expansion plan, Alkhalaf added.

For more exclusive interviews

The CEO said the company’s financial results aligned with its plan for the first half of 2024, as Leejam achieved a 19% year-on-year (YoY) increase in its revenues, with stable profit margins.

This was despite higher costs and expenses related to the opening of 20 fitness centers as costs are recognized immediately upon opening any new center, while revenues take time to reach their normal levels.

He explained that Q2 2024 coincided with Eid al-Fitr and Eid al-Adha holidays, which are typically low seasons for subscription sales. Thus, Leejam introduced a bundle of campaigns and promotions from the second quarter to the first quarter of this year as a proactive step to deal with the weak seasons.

The CEO highlighted that the weight of Leejam’s Xpress fitness center brand soared in Q2 2024. It Is expected to return to normal levels following the opening of the under-construction traditional centers.

The second quarter also saw increased focus on the opening campaigns of the new centers being inaugurated since Q4 2023 to accelerate growth in their revenues, subscriptions, and thus profitability.

Alkhalaf pointed out that Leejam softened the temporary impact on costs after opening 20 Fitness Time centers during the past 12 months amid elevated kick-off operations for the new centers.

Leejam’s latest financial results included expenses related to new investments in various avenues such as physical therapy centers, which are still in their early phases, in addition to one-off expenses related to the closure of two centers in Jeddah.

By the end of Q2 2024, Leejam had 180 operating Fitness Time centers (130 for men and 50 for women) and 428,000 memberships (336,000 men and 92,000 women).

He pointed out that the men's branches in the Central Province still contribute the most to revenues due to their high share compared to other regions.

The promotional campaign for students and summer programs was part of the company's strategy to reach all target segments through various means. The discount offers were successful for starters but are still in their initial phases.

As for the third-quarter performance, Leejam will continue to expand and open new centers until year-end, in line with the success achieved in implementing its 2025 plan, Alkhalaf concluded.

According to data compiled by Argaam, Leejam reported a net profit rise of 24% in H1 2024 to SAR 167 million, from SAR 135 million in the year-earlier period. Its second-quarter income reached SAR 73 million.