Town Sports International (TSI), New York, had a decrease of $1.1 million, or 0.9 percent, in first quarter 2011 revenue compared to the same period last year, according to financials released by the company today. The decrease was mostly driven by promotion costs and a decline in membership dues revenue, which was due to the introduction of several restricted memberships at lower rates, according to TSI.
Revenue in first quarter 2011 was $116.7 million compared to $117.7 million in first quarter 2010.
Ancillary club revenue was $23.5 million this quarter compared to $21.8 million in the same period last year. The majority of that ancillary revenue was from personal training. Personal training revenue increased from $14.7 million in first quarter 2010 to $15.7 million this past quarter.
Member count rose 17,000 in the first quarter to 510,000. That was the biggest member increase since the first quarter of 2008. It compares to a 9,000 member count increase in first quarter 2010. Attrition decreased to 3.2 percent in the first quarter compared to 3.5 percent in first quarter 2010.
“We believe that the initiatives we have put in place over the past year to drive more member sign-ups, continue to reduce attrition and streamline the sales process to make it more productive and more profitable are now being reflected solidly in our results,” Bob Giardina, CEO of TSI, said. “We expect that these and other initiatives, combined with an improving economy, will continue to benefit our bottom line.”
The company expects its second quarter 2011 revenue to be between $117 million and $118 million compared to $117.4 million in second quarter 2010. The company expects net income to be between $2 million and $2.5 million.
TSI plans to invest $29 million to $32 million in capital expenditure through the end of the year. This amount includes approximately $7.5 million to $8.5 million related to two planned club openings in the second half of the year.
Approximately $15.5 million of the capital expenditures would be for upgrades on existing clubs, $4.3 million will be used for major renovations at clubs with recent lease renewals and to upgrade its in-club entertainment system network. TSI also plans to invest $2 million to $3 million to enhance its management information and communication systems.
One thing TSI is doing to increase that revenue is introducing a personal training membership in which members get one personal training session each month for 50 percent of the normal personal training cost.
TSI does business as New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs and Washington Sports Clubs.