EDEN PRAIRIE, MN — Membership growth and in-center revenue led Life Time Fitness to a 33 percent increase in second quarter earnings, according to the company. Those earnings are expected to continue growing despite an overall decrease in consumer spending, according to Mike Robinson, CFO. He said in a call with investors last month that the company pulls from a higher end market, and those members treat health club memberships as less of a discretionary spend.
Life Time's revenue increased 32 percent to $162.1 million in the second quarter from $122.5 million during the same period last year. Total revenue for the first six months of 2007 grew to $315.2 million from $237.9 million during the same period last year.
Net income during the quarter grew 33.1 percent to $16.5 million compared to net income of $12.4 million for the same period last year. Net income grew 34.2 percent in the first six months of 2007 from $22.8 million to $30.6 million.
Much of the revenue growth came from new memberships. The company opened four clubs during the second quarter, which ended June 30. Memberships increased 24.5 percent to 489,489, and membership dues increased 32 percent.
Life Time has raised some of the membership dues at certain clubs to $79 per month for new members. The company often offers memberships at $49 per month when opening a club, increasing that amount several months later for new members to $59 per month.
When asked whether the goal in raising the membership dues was to decrease memberships at full clubs, Bahram Akradi, CEO of Life Time, said that often the increases came at clubs with memberships at 12,000. He wants that number to decrease to about 11,000 with more members at the $79 per month rate, he says.