Chanhassen, MN — Life Time Fitness will cut 100 jobs at its headquarters in Chanhassen, MN, as the company scales down its expansion plans.
The layoffs are the first in the 16-year history of the company. The jobs that will be eliminated are tied to club expansion, construction, architecture and real estate, representing about 12 percent of the more than 800 corporate jobs at the company. Employees whose jobs were cut will receive a severance.
In a filing with the Securities and Exchange Commission last month, Life Time announced it was reducing the number of clubs it planned to open in 2009 from 11 to six. The announcement reflected similar statements made during Life Time's third quarter earnings call in which Life Time executives cited tightening credit markets and the downturn in the economy as factors in their decision.
"The realities of reducing new club construction plans meant we had to take a tough look at our staffing levels and our cost structure," says Life Time corporate spokesperson Jason Thunstrom.
Life Time opened 11 clubs in 2008 and now has 81 clubs in 11 states.
Life Time's stock, which took a hit after a negative report from a stock market research company, received a boost last month after the purchase of the company's stock by Green Equity Investors, an affiliate of the $9 billion private equity firm Leonard Green and Partners.
A filing showed that from mid-October through November, Green Equity Investors had purchased $53.5 million worth of Life Time stock, or about $14.74 per share.
Citron Research, a research shop that focuses on what it considers to be overvalued situations or scams in the stock market, published a negative report about Life Time last month, saying the company has a business model that no company has ever proven successful. Citron cited Life Time's monthly membership contracts as its biggest strength and its biggest weakness. The report also said that Life Time's equity would eventually be wiped away as the company carried a debt load that it would no longer be able to service.