Not The Investment Of A ‘Life Time’

Posted November 1, 2013 12:50 pm by healthclubnews

Staying fit is very important. There’s no question there. Question is; how do you do it? There’s an increasing number of options for working out. And during economic downturns, many people turn to home remedies for getting their cardio in, and this includes doing away with the gym membership. Plus, how many of us join a gym as a New Year’s resolution and then quit?

And as employment remains at elevated levels, with future GDP growth questionable, one of the gyms that will feel the squeeze the most is Life Time Fitness (LTM).

Life Time is very susceptible to the idea of “trading down,” given its gyms are higher-end (aka pricier) than the average gym. As consumers opt to forego the gym entirely or choose a cheaper alternative, Life Time is likely to see top- and bottom-line weakness, which would not be the first time.

(click to enlarge)

We believe we’re already seeing the start of the earnings decline/misses trend. Shares in Life Time took a beating back in February after the company reported weak quarterly and full year earnings results. The company was hit with two major headwinds – lower membership growth year over year and higher membership acquisition costs. Now the company is facing an even bigger headwind, each additional dollar in revenues is met with an additional dollar in expenses (more to follow).

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Life Time Fitness Management Discusses Q3 2013 Results – Earnings Call Transcript Thu, Oct 24 • Comment!

About the author: Marshall Hargrave

Registered investment adviser rep and entrepreneur. Started with out NMFN before venturing out on my own. Now running an investment consulting company. Follow me on Twitter @mhargra