- Lifetime Group shares plunged 15% after the company’s third-quarter results revealed increased spending to improve the premium member experience.
- The company said its fitness center operating costs rose 8.2% year over year to $319.4 million in the quarter.
- Bahram Akhradi, CEO of Lifetime, said the investment had helped the club drive member engagement.
Lifetime Group Holdings Inc. signing at the New York Stock Exchange on October 7, 2021.
Source: New York Stock Exchange
Lifetime Group’s stock price plunged 15% on Wednesday as the company’s stock price plummeted. Third quarter results It has become clear that we are increasing spending to improve the experience for our premium members.
The company said operating costs for fitness centers, including new and expanded locations, rose 8.2% from a year earlier to $319.4 million in the quarter.
Lifetime CEO Bahram Akradi said investments such as new pickleball courts and personal training programs have helped drive member engagement with the club, with average member visit rates up 24% since 2019. He said he did. The company has a total of 170 centers.
“With 150 billion impressions per year, it’s time for Lifetime to start expanding,” Akradi said. “What other products and services can consumers buy from us?”
The program change is an attempt to keep Lifetime’s affluent customer base happy as prices increase across the board and many consumers increasingly value premium products.
Lifetime has raised prices at many of its stores in recent years, but prices vary by market. Akradi said on Wednesday that while the majority of price changes have already taken place, an additional 20% to 25% of its clubs have the opportunity to further increase membership prices over the next six to 12 months.
“We’re not leveraging all the different connections and different programs that we have, so there’s significant work being done to codify all of that,” Akraj said. . “Every product we put out has to be the absolute best.”
Akradi said the new products are worth a long-term investment as a way to strengthen the luxury brand. More member engagement means more repeat visits and more spending over the life of the relationship, he said.
For example, investing in an assisted stretching program called “Dynamic Stretching” could represent a $50 million market opportunity in 2024, according to the company.
Lifetime is also starting to consider incorporating weight loss drugs into members’ fitness plans as a way to take advantage of the latest GLP-1 trends, Chief Operating Officer Jeff Zwiefel told CNBC.
For the third quarter, Life Time reported revenue of $585.2 million and net income of $7.9 million, or 4 cents per share. In the third quarter of last year, the company earned $24.7 million, or 12 cents per share, on sales of $496.4 million.
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