Two days removed from its fifth anniversary as a public company, Planet Fitness CEO Chris Rondeau (who has been CEO since 2013 and at the company since 1993) finds himself reporting a once unthought of quarterly loss for the one-time growth juggernaut, working out a bit from his home gym (but also going to his local Planet Fitness) and thinking of ways to keep gym goers safe in the age of COVID-19.
Suffice it to say, it’s not normal times as scores of gyms across the country remain closed because of the pandemic while other former industry heavyweights such as 24 Hour Fitness enter bankruptcy.
“It’s totally crazy how you can even go from 53 straight quarters of positive same-store sales in a business that is just on fire to an industry that goes to zero revenue,” Rondeau told Yahoo Finance via phone moments after his earnings call with analysts Tuesday evening.
Here’s how Planet Fitness’ second quarter stacked up compared to Wall Street estimates.
Net Sales: declined 77.9% from a year ago to $40.2 million versus estimates for $38.1 million
Adjusted loss per share: 32 cents a share (45 cents a share profit a year ago) versus estimates for a loss of 17 cents a share.
Hot Notes: (1) No guidance provided; 1,477 out of 2,059 gyms have been reopened and are operating; Rondeau tells Yahoo Finance Planet Fitness still has 1,000 gyms in its development pipeline; initial share price reaction after-hours: -3%
It’s worth keeping in mind how abnormal 2020 will be for Planet Fitness.
Rondeau has taken Planet Fitness from 918 locations at end 2015 to more than 2,000 around the world today. That new store growth coupled with strong membership growth seemingly every quarter since the 2015 IPO has made Planet Fitness a Wall Street darling. Planet Fitness shares finished their first day of trading on Aug. 6, 2015 at about $15, per Yahoo Finance Premium data. The stock reached a peak in late February this year of $87 — marking a 480% surge from the first day of trading.
The stock has since come down to about $53 amid uncertainty on the future of gyms due to the lingering presence of COVID-19.
The pandemic has sent people off to build their own home gyms with Peloton bikes and treadmills, as well as The Mirror (a business that Lululemon just bought for a cool $500 million). Despite the unknown outlook, the main reason why Planet Fitness shares haven’t fallen further is because it may be the only national gym chain in business when this is all said and done. It may take some time to get there, but all signs suggest few will be able to rival Planet Fitness’ scale and subsequent low price membership model.
In the meantime, Rondeau is focused on supercharging Planet Fitness’ health protocols (masks are now mandatory for visitors) for its gyms and encouraging people to come back. Planet Fitness has also boosted its mobile app capabilities, for instance adding a feature for a member to check capacity at a local gym before visiting.
Rondeau says people are slowly returning to the 1,400 or so gyms that have reopened. But, it will take time.
“I think the issue is getting people in that first time [back] to feel comfortable and to see what the gym looks like and how it's laid out, and to reduce the fear,” Rondeau says.