Nov 1, 2007 12:00 PM

New York — Town Sports International (TSI), New York, reported that third quarter 2007 revenue grew 8.7 percent to $118.9 million from $109.4 million in third quarter 2006. The announcement came on the first day that Alexander Alimanestianu assumed the CEO role from Robert Giardina, who stepped down for undisclosed personal and health reasons. Giardina had been with the company for 26 years. Alimanestianu was the company's former president.

The revenue growth was driven by growth in membership revenue and ancillary club revenue, Alimanestianu says. Membership revenue grew 7.9 percent to $96.9 million from $89.8 million in third quarter 2006. Ancillary club revenue for the quarter grew 11.8 percent to $20.5 million from $18.3 million in the same quarter last year.

Alimanestianu said in a call with investors and analysts on Nov. 1 that although membership increased 6.9 percent, the company's mature clubs had experienced slightly lower than expected membership sales in the third quarter. The numbers picked up in October, but Alimanestianu was unable to explain the overall sluggish sales, and he refuted a question that implied the company's clustering strategy might be causing new clubs to cannibalize members from more mature clubs. He said that the company researches locations to ensure cannibalization does not occur and that membership actually increases at mature clubs that are near newer facilities.

The company expects total revenue for 2007 to be in the range of $473 million to $475 million, representing 9 percent to 10 percent growth over 2006. Net income is expected to be between $12.5 million and $13.3 million for 2007, compared to $4.6 million in 2006.

The company will open nine more clubs in the fourth quarter. For 2008, the company plans to open 15 clubs, which will include a move into the Providence, RI, market.

Alimanestianu says that during the past 30 days, he's been immersing himself in areas of the business that Giardina had been focused on and is talking to key people to get a sense of what's on their mind. He's also been focused on getting clubs open in the fourth quarter and preparing for 2008.

Alimanestianu has been with TSI since 1990, working with Giardina during that time, and has been involved in the development or acquisition of virtually all of the company's clubs.

TSI operates the Sports Clubs network of clubs, which include Boston Sports Clubs, New York Sports Clubs, Philadelphia Sports Clubs and Washington Sports Clubs.

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