S&P: 24 Hour Fitness view negative

Standard & Poor's said it revised the outlook on 24 Hour Fitness Worldwide Inc. to negative from stable and affirmed its B corporate credit rating.

"The outlook revision reflects our concern that the recession will cause comparable club revenue to continue to decline and aggravate an unfavorable mix between prepaid and monthly memberships," S&P analyst Tulip Lim said in a statement.

"In particular, we believe these trends could have repercussions for 24 Hour Fitness' liquidity amid tightening financial covenants."

The B rating reflects 24 Hour Fitness' aggressive growth strategy, its high financial risk, narrowing margin of compliance with financial covenants and competitive pressures in the fitness club industry, the agency said.

The company's geographic diversity and market-leading club clusters in several metropolitan areas are modest positives, S&P said.

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