Town Sports International Holdings Inc. (TSI), New York, is undergoing a review that could lead to the sale of the company, TSI announced today just prior to its 2014 earnings call. In addition, Robert Giardina, who had been CEO since 2010, has been appointed executive chairman of the board. Replacing him as CEO is Daniel Gallagher, who had been serving as president and COO, positions he has held since January 2014. Prior to that, Gallagher had been chief financial officer.
The release noted that TSI's board of directors is evaluating strategic alternatives, including a possible sale of the company, and has retained Deutsche Bank Securities Inc. to assist it in the process.
Giardina will work with Gallagher in the coming months to ensure a smooth transition and focus on assisting the company with its strategic review. Thomas J. Galligan III, who has been the chairman of the board since March 2010, will remain on the board as the lead independent director.
Giardina said: "This is an exciting time for Town Sports as we are transforming our business to align with the changing fitness industry and evolving customer preferences. We have made significant improvements to our operations that better position us for the future. We expect our high value, low price (HVLP) strategy to drive improved productivity of our club base and see many opportunities ahead for Town Sports to leverage the growing consumer interest in health and fitness. We are focused on maximizing shareholder value and, while we continue to implement our HVLP conversion process, our Board has also engaged Deutsche Bank to assist it in exploring strategic alternatives for TSI. The Board and I feel the time is right for a smooth leadership transition at the company."
Giardina continued: "Dan Gallagher, with whom I have had the pleasure of working alongside for the past five years, has been instrumental in the development as well as the implementation of our HVLP strategy, which we have accelerated and expanded following its initial rollout. Dan is a proven leader, with an extensive financial background, including six years as CFO prior to assuming the role of COO at TSI. The board and I have great confidence in Dan's ability to lead our business forward and I am delighted to announce his appointment as CEO."
Gallagher added, "I have been privileged to work with the outstanding team at TSI for the last 16 years, including the last five working closely with Bob. During this time we have navigated many industry changes and have successfully adapted our business in response. We are encouraged by the early results of our HVLP strategy. Our focus will remain on driving a recovery in earnings and cash flow and maximizing shareholder value as we improve the performance and operations of our clubs and gain greater share of the growing health and fitness market. I look forward to Bob's continued involvement as we execute this strategy at TSI."