Slow Membership Sales Hit Bally's Bottom Line

CHICAGO — Despite impressive 25 percent growth of its products and services revenue, slow new member sales may have sabotaged Bally Total Fitness Holding Corp. quarterly financials.

The company reported net revenues of $241.5 million for the quarter ended Sept. 30, 2003. This compares to net revenues of $243.1 million for the third quarter of 2002. Net income for the third quarter was $4.7 million, or $.14 per diluted share, compared to $7.2 million, or $.22 per diluted share, in the prior year quarter.

“This quarter, Bally continued its strong performance in most key areas, though we still experienced softness in revenue generated from new memberships,” said Paul Toback, chairman, president and CEO. “In addition to the downward pressure we have experienced over the last several quarters due to the weak economy and competition, the August blackout and the September hurricane placed additional pressure on membership trends during the quarter. However, I remain confident that the changes we have made over the past six months have begun to set the stage for improving membership sales.

Looking ahead, management said it expects further progress on all fronts of the company's operating strategy, but cautioned that new membership initiatives will require time to reverse the decline in new customer joins.

“With all of our other operational initiatives progressing well, signing up new customers and continuing to retain the ones we have will continue to be priority one in the foreseeable future,” Toback said. “While revenue and earnings will continue to be similarly affected in future quarters until the trend in new memberships is reversed, we are confident that we are building the framework that will give us the best opportunity for sustained long-term growth.”

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