Wednesday, September 23, 2009

Moves Look To Be Working Out

“Life Time Fitness Inc. is a company that shouldn't be doing well in this recession. And, for a while, it wasn't. After a disastrous fourth quarter that saw its stock tumble, the Chanhassen-based chain of upscale fitness centers has been intent on proving to Wall Street -- and to its customers -- that it's not a luxury good. As consumers pared back on ‘wants’ and focused on ‘needs,’ Life Time was determined to be needed. Like rock-climbing or yoga? Life Time added more than two dozen clubs to help members find a niche. It went social, cranking up a members-only website to allow them to connect with one another online, as well as learn about events at their clubs. And, it added a program that lets members get discounts at other businesses, such as Costco and T-Mobile. It also implemented moves more typical of companies in this recession: It cut staff -- its first layoffs in corporate history -- and scaled back expansion from about 12 new clubs a year to three. It has cut marketing costs and tried to keep costs down for luring new members. So far, the strategies appear to be working. The clubs had double-digit membership growth in the most recent quarter. Average revenue per membership, after falling each quarter last year, is on the rise again. And the stock, which bottomed out to an all-time low $7.07 in March, has quadrupled since then. ‘We have changed our strategies to do two things: always be cash-flow positive so we are in charge of our own destination,’ explained Bahram Akradi, the company's chairman and CEO. The second: ‘Deliver even a greater value to our customers -- so good that they really can't afford to give it up.’

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