NEW YORK -- Despite decreases in revenue, membership and clubs, Town Sports International (TSI) CEO Robert Giardina is confident about the company’s prospects.
Giardina made his encouraging comments about TSI during today’s second quarter financial call with analysts.
“Overall, while we have a long way to go, we feel there is stability back in the business and that we’re beginning to move in the right direction,” said Giardina, who returned as TSI’s president and CEO in March.
For the period ending June 30, 2010, TSI’s revenue decreased 5.2 percent, from $123.9 million to $117.4 million, compared to the corresponding period last year. Also, comparable club revenue decreased 4.2 percent in second quarter 2010 compared to second quarter 2009.
TSI suffered a net loss of $815,000 in second quarter 2010 compared to net income of $2.5 million earned in second quarter 2009.
The total member count at TSI clubs, excluding short-term summer, seasonal and student members, decreased 2.2 percent compared to March 31, 2010, and 3.8 percent compared to June 30, 2009.
The total number of clubs decreased from 166 on June 30, 2009, to 161 on June 30, 2010.
Giardina, since his return, has visited about 150 of those clubs and said he has seen an improvement in service level at the clubs. In addition to a reinstatement of a $20 processing fee for new members as of June 1, TSI plans to increase its annual dues rate by 1.5 percent for a majority of its members on Sept. 1.
“We think we deserve it,” Giardina said. “We deliver a great experience and a great value, and our clubs are in great shape.”
One highlight from the second-quarter results is TSI’s attrition rate, which averaged 3.3 percent per month in second quarter 2010 compared to 3.5 percent per month in first quarter 2010 and 3.7 percent per month in second quarter 2009.
“Our attrition rate continued to improve nicely and is very close to pre-recession levels,” Giardina said.
TSI also has a new student rate that is no longer confined to the summer months. Students between the ages of 14 and 22 can receive an ongoing month-to-month membership for $20 a month, in addition to a $99 enrollment fee and a $20 processing fee. Students would not be allowed to work out at the club during peak hours between 4:30 p.m. and 7:30 p.m. unless they pay an extra $7.50 fee.
Giardina mentioned TSI’s recent ad campaign that has poked fun at BP oil executives, basketball player LeBron James and actor Mel Gibson. The Gibson ad, in which TSI offers him an additional month free to reduce “stress and anger,” has recently been featured on CNN.com, CBS Radio, Comedy Central’s “The Colbert Report” and Access Hollywood.
“The good news is that people are talking about us again,” Giardina said.
TSI lowered its guidance for the third quarter, expecting revenue to be between $113.5 million and $114.5 million (down from $120.4 million) and a net loss of between $1 million and $1.5 million.
TSI’s stock was $2.75 in afternoon trading, a slight increase from the day’s open at $2.65.