Saturday, June 22, 2024

Planet Fitness Shares Rise, Boosted by Membership and Store Growth

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Key Takeaways

  • Planet Fitness beat profit and sales estimates and raised its outlook as it added members and locations.
  • Interim CEO Craig Benson announced a new effort to make owning and operating a store more attractive.
  • Benson also indicated that he was helping the board search for a replacement for former CEO Chris Rondeau.

Shares of Planet Fitness (PLNT) skyrocketed after the operator of fitness centers posted better-than-expected results and raised its guidance as it added members and stores.

The company reported third quarter fiscal earnings per share (EPS) of $0.59, with revenue gaining 13.6% from the prior year to $277.6 million. Both exceeded forecasts. Same-store sales increased 8.4%, in line with estimates.

Planet Fitness indicated that it had more than 18.5 million members at the end of September, up from 18.4 million in the previous quarter and 18.1 million in the first quarter. The company increased store count by 26 during the third quarter, giving it a global total of 2,498.

Interim CEO Craig Benson announced a shakeup in the company’s operations, explaining that Planet Fitness would be “adjusting our store-level return model to further improve the attractiveness of opening and operating Planet Fitness stores in a new macro-environment.” He added that the changes will include lowering capital costs by “extending the timing for replacing equipment and completing remodels.”

Benson also said that he is assisting the board in finding a permanent CEO. Previous CEO Chris Rondeau was ousted in a surprise move in mid-September without explanation. He remains on the board and is helping with the transition.

The company now anticipates that full-year revenue will grow 14%, up from its previous outlook of 12%. It forecasts earnings before interest, taxes, depreciation, and amortization (EBITDA) of 18% compared to its earlier guidance of 17%.

Planet Fitness shares plunged to their lowest level since the outbreak of the COVID-19 pandemic following Rondeau’s firing, and while they’ve rallied since then, shares remain down about 20% for the year.

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