After exceeding estimates on both fronts in the third quarter and improving its outlook for the year, shares of Planet Fitness jumped by double digits.
This is the company’s performance in relation to the expectations of Wall Street analysts as reported by LSEG, formerly refinitiv.
- Profits per share: adjusted to 59 cents from the expected 55 cents.
- Revenue: $277.6 million against the projected $268.2 million.
Planet Fitness reported a $39.1 million profit for the quarter that ended on September 30, up from $26.9 million, or 32 cents per share, the same time last year. After deducting one-time expenses, the business declared earnings per share of 59 cents.
Revenue reached $277.6 million, up nearly 14%.
The company announced that it has increased its revenue growth forecast for the year from 12% to 14%, exceeding analysts’ estimates of 11.6% growth.
Following the unexpected resignation of outgoing CEO Chris Rondeau, interim CEO Craig Benson conducted the company’s quarterly earnings call with analysts and investors.
Rondeau was fired by the gym chain’s board in mid-September, shocking both staff members and investors. During the earnings call, the company did not provide any further information about his departure, but Benson stated that the search for his replacement is “going well.” After Rondeau’s exit, Planet Fitness shares have increased, but they are still down more than 20% for the year.
Benson described the company’s forward-looking growth plan in a press release from Planet Fitness.
According to Benson, “We’re modifying our store-level return model to further enhance the allure of opening and running Planet Fitness stores in a new macroenvironment.” “To set ourselves and our franchisees up for continued long-term sustainable growth, the changes include decreasing certain capital investments by extending the timing for replacing equipment and completing remodels.”
Midway through October, both new and current franchise owners received updated agreement details that featured significant modifications to the business structure, such as:
- A longer franchise agreement—12 years instead of 10—that would have eliminated the initial $20,000 in franchise fees.
- Reducing the 12-month grace period for franchisees to six months.
- Reequip times were prolonged in order to save money and cut down on store expenditures.
CFO Tom Fitzgerald stated during the call, “We think that in the end, this was the best set of changes that we could develop to improve and free up some cash.” “To increase the store returns of those new stores, invest in the growth of new stores.”
Fitzgerald added that the business is testing raising the $10 to $15 price of its “Classic Membership” in over 100 test markets.
“Our ultimate criterion is that we wish to maintain member growth at all costs,” he stated.
