Viva Leisure (ASX:VVA) share price sinks 7% to 52-week low. Here's why.

The health club operator's shares have taken a beating today…

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The Viva Leisure Ltd (ASX: VVA) share price is deep in the red during late afternoon trade. This comes after the health club operator provided investors with an outlook for FY21.

At the time of writing, Viva Leisure shares are down 7.37% to $1.57 – just shy of its 52-week low of $1.55 recorded earlier today.

What's happening with the Viva Leisure share price?

Investors are selling off Viva Leisure shares following an unchanged FY21 outlook from its last trading update in May.

According to its release, the company announced that FY21 revenue is projected to be between 81 million to $83 million. This is a 25.6% to 31.2% increase when compared to the first-half of the 2021 financial year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) is estimated to stand at around $13 million to $13.5 million. The forecasted result reflects a 32.1% to 41.1% jump on the prior 6 months. The EBITDA margin is also set to grow from roughly 16.5% to 17.5%.

While the numbers may appear to be positive, Viva Leisure noted that increased costs will impact the final result. This is due to accelerated roll-outs and slower than expected trading conditions caused by COVID-19. In addition, legal fees on completed acquisitions, capital raising costs as well as restructure expenses, are also expected to weigh down the company's bottom line.

Looking at the company's share price over the last 12 months, the Viva share price is down more than 30%. Year-to-date the company has also not fared well, with its shares down almost 50%.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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