Increased competition in the US health club market has dealt a blow to Chicago-based Bally Fitness, which has reported fourth-quarter profits fell below expectations.

Bally said it had lost $39.2m in the December quarter, compared with a loss of $16.3m in the same period a year ago.

For the full year, net income fell to $3.3m from $80.7m in 2001. Bally said this was due to special charges of $72.2m, without which income was $58.4m.

President and CEO, Paul Toback, said there has been a 'disappointing decrease' in new member sales, which he blamed on 'the challenging economy' and 'increased competition', but which he intends to address through 'enhanced marketing and advertising strategies'.

The group will now work to lower operating costs and improve margins, while focusing on its personal training business, which has seen growth over the past year, and also its new weight management program.

'Although this has been a challenging year,' said Toback, 'we enter 2003 with a strong focus on these key strategies. We have a tough job ahead of us, but much of the groundwork has already been laid and we are confident the results will be strong.'