A person works out at Planet Fitness as they re-open at 25 percent capacity in Boston’s Dorchester on Feb. 1, 2021.
Jessica Rinaldi | Boston Globe | Getty Images
Planet Fitness shares surged double digits after beating expectations on both lines for the third quarter and raising its outlook for the year.
Here’s how the company did compared with Wall Street analysts’ expectations, according to LSEG, formerly known as Refinitiv.
- Earnings per share: 59 cents, adjusted, vs. 55 cents expected
- Revenue: $277.6 million vs. $268.2 million expected
For the quarter ended Sept. 30, Planet Fitness posted a profit of $39.1 million, or 46 cents a share, up from $26.9 million, or 32 cents a share, a year earlier. Adjusting for one-time items, the company reported per-share earnings of 59 cents.
Revenue jumped nearly 14% to $277.6 million.
The company said it now expects to post 14% revenue growth for the year, up from its previous guidance of 12% and higher than analysts’ expectations of 11.6%.
Interim CEO Craig Benson led the company’s quarterly earnings call with analysts and investors following the abrupt departure of former Chief Executive Chris Rondeau.
The gym chain’s board ousted Rondeau in mid-September, stunning both investors and employees. The company didn’t share additional details on his departure during the earnings call, but Benson confirmed the search for his successor is “going well.” Planet Fitness shares have recovered since Rondeau’s departure, but remain down more than 20% year to date.
Benson outlined Planet Fitness’ forward-looking growth strategy in the company’s press release.
“We’re adjusting our store-level return model to further improve the attractiveness of opening and operating Planet Fitness stores in a new macro-environment,” Benson said. “The changes include decreasing certain capital investments by extending the timing for replacing equipment and completing remodels, to set us and our franchisees up for continued long-term sustainable growth.”
New and existing franchise owners received updated agreement details in mid-October that included key changes to the business structure, including:
- an increased franchise agreement from 10 years to 12 years to eliminate the initial $20,000 franchise fees.
- shortening grace periods for franchisees from 12 to six months.
- reequip periods extended to free up capital and reduce store spending.
“We think ultimately this was the best set of changes that we could develop to improve to free up some cash,” CFO Tom Fitzgerald said on the call. “To invest in new store growth, improve the store returns of those new stores.”
Fitzgerald also confirmed the company is experimenting with price increases for its “Classic Membership,” from $10 to $15, in more than 100 test markets.
“At the end of the day, our criteria is we don’t want to sacrifice member growth,” he said.
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