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TSI’s Revenue Falls More Than 6 Percent

NEW YORK -- Revenue dropped by $7.3 million in third quarter 2010 for Town Sports International (TSI), New York, according to financials released today.

The company’s third quarter revenue of $113.1 million was a 6.1 percent decrease from third quarter 2009. Revenue from comparable clubs (those operated for more than 12 months) decreased 5 percent.

Member numbers also fell by 0.2 percent comparing Sept. 30, 2010, to Sept. 30, 2009, according to the company. However, attrition improved, averaging 3.8 percent per month in the third quarter compared to 4.2 percent per month in the third quarter last year.

Robert Giardiana, TSI’s CEO, said on a call with analysts that TSI lost 3,000 net members in third quarter 2010. In third quarter 2009, TSI lost 19,000 net members, which included 10,000 student members.

“Our quarter end count was just 1,000 members below a year ago,” Giardina said on the call. “So, we are feeling good about our expectation of having our first year-over-year membership increase since the first quarter of 2009.”

The company also had positive news in its ancillary revenues. Personal training revenue increased from $13.5 million in third quarter 2009 to $13.8 million this past quarter. Ancillary club revenue from sources other than personal training also increased from $7.2 million in third quarter 2009 to $7.8 million in third quarter 2010.

Membership dues and initiation fees dropped in the quarter. In third quarter 2010, membership dues were $89 million and initiation fees were $1.2 million compared to $95.4 million in membership dues and $3.1 million in initiation fees for third quarter 2009.

Net loss for the company was $18,000 compared to net loss of $1.5 million in the third quarter 2009.

“Overall, I’m very happy about many aspects of the business, including increased traffic and how our elevated member experience is having a positive impact on attrition,” Giardina said on the call. “Third quarter revenue was still not quite up to the expectations we had set for ourselves. But as you know, the first component of the business that has to move in the right direction is membership, and we are encouraged by the success we are seeing on this front.”

For the first nine months of 2010, the revenue numbers are down by $22.7 million, or 6.1 percent, compared to the same period last year.

For the fourth quarter, TSI anticipates revenue of between $110 million and $111 million compared to $114.3 million for fourth quarter 2009. The company expects a net loss in the fourth quarter of between $0 and $500,000.

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