S&P drops 24 Hour Fitness outlook to negative

Standard & Poor's said it revised its outlook on 24 Hour Fitness Worldwide Inc. to negative from stable based on weak club operations as a result of the soft economy and the costs of the new club-level managers.

The agency said that the company's cushion of compliance with its bank covenant has narrowed as well.

Also, S&P said it affirmed the B corporate credit rating.

The ratings on 24 Hour Fitness reflect the company's aggressive growth strategy, its high financial risk and the competitive pressures in the fitness club industry, the agency noted, adding that the company's geographic diversity and market-leading club clusters in several metropolitan areas partially offset these considerations.

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