Tuesday, December 30, 2008

Fitness Firm Opening 2 More Clubs Despite Tough Times

“Opening a new business is always a gamble, even in the best of times. Star-Ledger file photoOutdoor pool at a Life Time Fitness facility. But imagine swinging your doors open to the public at the height of an economic recession. At a time when many construction projects are being torpedoed by what is being described as the worst financial storm in decades, Life Time Fitness is opening not one, but two, mammoth health and fitness clubs in North Jersey -- one in Florham Park, and another scheduled to open in late January in Berkeley Heights. These are not just ordinary health clubs, mind you. These are health clubs on steroids. The Florham Park facility is 110,000 square feet. By way of perspective, the average Home Depot store is about 130,000 square feet. Michael Robinson, chief financial officer at Life Time Fitness, said the company is prudently managing its growth in the near term to weather the financial storm but is confident about its prospects going forward. ‘Up until September, we were extremely successful in raising capital, but it has gotten tougher,’ Robinson said. ‘That is when we stepped back and said prudence calls for us to slow down and live within our means.’ Robinson said Life Time, which went public in 2004, planned to open 11 centers in both 2009 and 2010, but scaled that number down to six, for a total of 12 clubs in two years. The health club industry as a whole is suffering from the economic recession. U.S. consumer demand dropped last year, to 41.5 million members for 2007 from 42.7 million in 2006, according to the International Health, Racquet & Sportsclub Association, as hard-pressed consumers cut club memberships and other discretionary spending. Earlier this month, Bally Total Fitness of Greater New York and its affiliates, including Bally Total Fitness Holding Corp., filed Chapter 11 bankruptcy, citing the burden of its long-term debts and constrained credit markets for its downfall. But the health club industry said revenues continued to grow, to $18.5 billion from $17.6 billion, ‘which suggests that clubs are collecting more revenue per member than ever before,’ the group reported in June.”


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