By Laura Cummings BBC News Online business reporter

The craze for pumping iron and pursuit of the body beautiful shows no sign of abating, but the fitness businesses themselves are looking anything but healthy.

As relative newcomers to the stock market, gym clubs had until recently seemed like a burgeoning industry.

But a series of profit warnings, most recently from sector darling Fitness First, has raised fears that the sector is heading for trouble.

Operators have blamed unexpected costs, ambitious expansion plans and fickle investors for their problems.

But the run of bad news has left analysts questioning whether the stock market is the right place for the sector, and some have suggested there could be more bad news to come.

Out with the old

In the last 18 months, three health chains who were listed on the London Stock Exchange - Cannons, Esporta and Dragons - have left the market either through management buyouts or by being taken over.

When the largest operator in Europe warns on profits in its core market, that's a warning to everyone.

Mark Reed, Teather & Greenwood

Smaller groups Clubhaus and Lady in Leisure have flirted with insolvency. Lady in Leisure went into administration last autumn while Clubhaus is still struggling.

More recently, Holmes Place, one of the leading 'premium' operators, was forced to warn of increasingly "challenging" conditions and is now in merger talks with rival Cannons.

Analysts had previously used the excuse that Holmes and Cannons operated in the more expensive 'premium' end of the fitness market, and that the budget sector was a more resilient and profitable model.

So when Fitness First, the leading 'value-for-money' operator, issued its profit warning out of the blue on 4 October, the wind was knocked out of the market.

"When the largest operator in Europe warns on profits in its core market, that's a warning to everyone," Mark Reed, leisure analyst at Teather & Greenwood, told BBC News Online.

Trying too hard?

Rising obesity and health worries put fitness clubs firmly in fashion a few years ago, and, at the time, demand far outstripped supply.

Have fitness clubs been pushing too hard?

The sector expanded rapidly, racking up high costs in the process.

But the result has been over-stretched balance sheets and all but one of the players, LA Fitness, has fallen short of profit expectations at least once.

And fears are now rising that the market is becoming saturated, particularly in London.

This, coupled with the sector's vulnerability to a slowdown in consumer spending, could herald more bad news to come.

"You get the feeling that there will be more knocks to numbers in the next few months," said Mr Reed.

Fighting fit

Concerns over prospects for the health and fitness industry are supported by figures from the Leisure Database Company (LDC).

The research group suggests that there is a 50% reduction in the number of new gym openings scheduled to open in 2003 compared to 2002.

Business is not going swimmingly for the sector

The LDC estimates that the industry still has at least four to five years' growth left, but that this will come from the budget and mid-market end of the sector.

The company bucking the gloomy trend, LA Fitness, supports the view that the market is not yet saturated.

But chief executive Fred Turok told BBC News Online that he agrees rivals had been "expanding too fast" and that restraint is paramount to survival.

LA Fitness has so far continued to meet profit expectations by sticking to prudent openings of gyms - 15-20 a year against around 100 for Fitness First.

Help on the way

But even Mr Turok said the industry was in need of help if it was to survive the new pressures of rising rental costs, business rates and insurance premiums, all of which are on an upward trend.

The sector isn't broken but it's going to continue to be more competitive

Greg Feehely, Old Mutual Securities

Mr Turok is one of a number of industry directors lobbying the government to reduce VAT on health clubs.

The Vanguard Group is part of the Fitness Industry Association, and is calling on the government to follow the lead of European counterparts, such as the Netherlands, by granting companies tax benefits for promoting a healthy workforce.

Keep on running

While the industry awaits a tax break, the stock market is continuing to take a cautious view of the fitness sector.

Despite LA Fitness bucking the trend and hitting its targets, shares in the group have lost almost half their value in the past 12 months.

The group is not alone, with smaller companies such as Topnotch and Hunters Leisure languishing at less than a quarter of their value a year ago.

"The sector isn't broken but it's going to continue to be more competitive and the market far more cautious," Greg Feehely, leisure analyst at Old Mutual Securities, told BBC News Online.