ohreally?

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    • Mon Apr 7th 14:09 PM | Rating: 0 0
      Commented on:
      Town Sports International: Gaining Strength
      Dear Blah: you may wish to refer to the 2007 10k report published on the CLUB website, especially pages F 15-17, where you will see that about $123,000,000 of the company debt carries 11% interest. I have a better rate for credit card purchases. To point out the obvious, the company needs to make $1.11 for every dollar spent to BREAK EVEN...

      As for a takeover, it would be a BUYER's market, not the seller's.

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    • Fri Apr 4th 11:41 AM | Rating: 0 0
      Commented on:
      Town Sports International: Gaining Strength
      regarding "blah": don't forget that EBITDA is earnings BEFORE interest, taxes, depreciation and amortization. High debt at high interest = virtually flat net income. I repeat: a stock that declines by 70% or more in a year is not suddenly a "value" stock. The value of the company will be determined largely by how they do vs. the competition. The overall number of people using healthclubs is growing slowly, with a huge untapped market. CLUB remains vulnerable to takeover.
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    • Fri Mar 14th 12:21 PM | Rating: 0 0
      Commented on:
      Town Sports International: Gaining Strength
      I am a member and former employee of NYSC branches of CLUB, and I hold stock in the company. While I believe there is upside potential to the stock price, and the company overall, I think Mr. Kent is wrong on several key issues.

      CLUB is not a "brand in its infancy" by any stretch of the imagination. It was a privately held company for about 30 years before going public. If you think of the company as "Wal-Mart", this clashes with the company's own description of targeting the "upper value" market segment , individuals between 21-50 with incomes of 50-150k.

      The company states that "comparable club revenue growth" was 5.2 % in 2007, about 1/3 less than the industry growth rate of 7.7% over the last 10 years.

      And the consolidation of Mom and Pop gyms (single location and smaller chains) has already occured to a large extent. The ones that remain are typically very well run by owner/management in favorable real estate settings, such as the gym operator who owns a residential / commercial building and doesn't have to pay rent to himself. When CLUB opens a new location, they often take from their own existing member pool at another location, so the pie isn't really growing.

      CLUB a few serious issues to address.
      1. The company carries a lot of debt. Total debt at the end of 2007 was listed as 444.24 million. This is 104 million more than at the end of 2003 (339.83 million). Revenues have also grown, but net profit is nearly flat over 5 years.
      2. Rising energy costs will really sock them. This is not unique to CLUB, but an increase of 3-5% in utility costs will hurt. The HVAC infrastructure is typically old and ineficient, and lighting and electricity costs are high.
      3. Acquiring and retaining qualified staff at all levels is an issue. Chief officers have left within the last year, and turnover has always been high at mid-level management and club staff. CLUB may be found responsible for penalties relating to how they compensate their employees.
      4. CLUB had its biggest growth as a private company in the mid 90's, and was flattening out as the stock bubble burst in 2000-2001. 9/11 had a devastating effect on the business, obviously. They had grown by being a little better than most other clubs, and by getting into a growing market that was underserved at the time.
      Now, there is more, and better competition. They have to get better again.

      2008 and 2009 are probably critical years for the company. They could be an acquisition target themselves, but remain competitive because there is so much demand for the product.

      Check out the companies 10-k filing of Feb 29, 2008 avaialble on their website - it contains most of the information that I referenced. Additional information is from the AOL Money & Finance section for CLUB.

      A value stock? Just because a stock has fallen by 66% over the last year doesn't make it a good value now. If it does make a nice recovery, it will probably be because they got a little better and everyone else is average or below in this industry.

      Time to go to the gym!
      View article »
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