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TSI Q1 Revenue Down as Giardina Returns as CEO

NEW YORK -- Town Sports International (TSI) reported a decrease in revenue during today’s first quarter 2010 earnings call with analysts.

TSI, which operates New York Sports Clubs, Boston Sports Clubs, Washington Sports Clubs and Philadelphia Sports Clubs, saw its revenue decline 7.1 percent to $117.7 million in first quarter 2010 compared to $126.7 million in first quarter 2009. TSI’s comparable club revenue also decreased 6 percent in first quarter 2010 compared to first quarter 2009.

Total membership increased 1.9 percent to 495,000 as of March 31, 2010, compared to 486,000 as of Dec. 31, 2009. TSI averaged 3.5 percent per month attrition in first quarter 2010 compared to 3.6 percent per month in both first quarter 2009 and fourth quarter 2009.

The net loss for TSI in first quarter 2010 was $732,000 compared to net income of $639,000 in first quarter 2009.

In its forward-looking statements, TSI lowered its revenue expectations for the second quarter from $123.9 million to between $116.5 million and $117.5 million. The New York-based company expects a net loss of between $1.2 million and $1.7 million in the second quarter.

Robert Giardina made his first public comments during today’s earnings call since he returned as president and CEO of TSI. Giardina, who left TSI for personal reasons in 2007 before resurfacing as the CEO of Hydromassage, replaced Alex Alimanestianu in March.

“It’s great to be back as CEO of Town Sports,” Giardina said on the call. “This is a company that I’ve been a part of for almost 30 years. I am thrilled that the board has asked me to return and excited to once again work with a brand that I am so passionate about and to help move this company forward.”

Giardina said that while he was at Hydromassage, he took note that smaller, low-cost operators gained a share in the industry during the economic downturn.

“While Town Sports has no plans to replicate this lost-cost model, we can certainly learn from the success of others,” Giardina said on the call. “As I see it, we have a lot of work ahead of us. But I am confident that together with my executive team members, we will re-emerge as an industry leader.”

TSI’s stock price was $4.02 in late afternoon trading on the NASDAQ stock exchange. The stock opened the day at $4.08.

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