Planet Fitness wrapped up the quarter with over 18 million members and is eyeing Asia as part of its international expansion plan
Shares of Planet Fitness took a 16% dive after first-quarter earnings and revenue missed Wall Street’s expectations, but the fitness operator saw continued membership growth and other positive signs.
Planet Fitness reported its net income increased to $22.7 million from $16.5 million, and revenue grew 19.0% to $222.23 million, below an expected $238.3 million.
Last month, Planet Fitness earned an average rating of “moderate buy” by fourteen brokerages after the fitness operator announced that it can double its membership numbers.
Despite its stock taking a stumble, Planet Fitness is eyeing international growth and has announced the return of its successful High School Summer Pass program.
Here’s a look at some key points from the recent earnings call:
Membership growth & commitment to fitness
Planet Fitness saw its membership grow in Q1, with a reported membership of over 18.1 million and a net increase of over 1.1 million members.
“This Q1 was the first time in four years that an all-important first quarter of membership growth was not interrupted by COVID,” said Chris Rondeau, Planet Fitness CEO, on the recent earnings call. He added that member growth continues to be the primary driver of the 9.9% systemwide same-store sales growth in the quarter.
As costs are rising daily for consumers, Rondeau sees the value in the Planet Fitness experience, which he points out is high-quality and affordable. He reported that all age generations surpassed pre-pandemic population levels during the quarter, with 40% of new joins as first-time gym members.
Rejoins were also positive at 30% compared to 20% in 2019, and the cancel rate indexed below last year’s rate in Q1.
“This marked the seventh straight quarter of year-over-year cancel rate improvement,” Rondeau said.
Members’ commitment to fitness is also higher than in pre-pandemic times, with increased overall visits per member.
“We continue to see consistent momentum toward full recovery the longer our stores have been opened since the temporary COVID closures,” Rondeau said. “At the end of Q1, more than 50% of our U.S. stores that opened before 2019 are back to or above pre-pandemic membership levels. Additionally, almost 60% are at or above their pre-COVID revenue per store.”
Marketing initiatives and partnerships
As for marketing, Planet Fitness invested heavily last year to go after the 80% of Americans who don’t belong to a gym.
The fitness operator also reports success with major brands such as Shell, Verizon, Sam’s Club, Chewy.com and Puma on purchase discounts and will continue to partner with brands to offer more discounts for members.
Targeting the youth & the return of Summer Pass
“We want to be the fitness brand people think of first when they are ready to start their wellness journey, regardless of their age,” Rondeau said, adding that generational trends also fuel confidence about the future of the fitness operator.
Gen Z and Millennial fitness consumers continue to lead memberships, with over 9% of each group now a member of Planet Fitness.
“We will continue to have Gen Z’s age into our prospects member pool with Gen Alphas only a few years behind,” Rondeau said. “To further strengthen our brand’s appeal with Gen Zs, earlier this week, we announced the return of our high school summer pass program.”
The program has proved successful in the past.
On Amazon ending its Halo division
Planet Fitness assures it will do the right thing by consumers who were affected by the news of Amazon shuttering its Halo division. The fitness operator had teamed up with Amazon to offer free fitness trackers as an incentive to customers who signed up for a Planet Fitness Black Card.
Rondeau said Amazon’s decision to close its Halo division was “unfortunate,” but he noted that the March sale didn’t perform as well as November.
“Thankfully, we’re pleased that Amazon has chosen to do the right thing, I guess,” he said. “And make good and give everybody an $80 Amazon gift card for those who subscribe to it.”
He added that Planet Fitness would waive the commitment for those members so that come July, if they’re not content, they won’t be tethered to a 12-month contract.
“It’s the right thing to do for the customer, and that’s the direction we’re taking there,” Rondeau said.
However, Planet Fitness isn’t looking to replace the Halo with another product at the moment.
International growth plans
While Planet Fitness has a presence in Canada, Australia and Mexico and announced an agreement to expand into New Zealand, the fitness operator is building a designated team to concentrate on growth outside the U.S. The company is considering Asia in particular.
Courtney Rehfeldt has worked in the broadcasting media industry since 2007 and has freelanced since 2012. Her work has been featured in Age of Awareness, Times Beacon Record, The New York Times, and she has an upcoming piece in Slate. She studied yoga & meditation under Beryl Bender Birch at The Hard & The Soft Yoga Institute. She enjoys hiking, being outdoors, and is an avid reader. Courtney has a BA in Media & Communications studies.