An individual works out at Planet Fitness as they re-open at 25 percent capability in Boston’s Dorchester on Feb. 1, 2021.
Jessica Rinaldi | Boston Globe | Getty Images
Planet Fitness shares surged double digits after beating expectations on each lines for the third quarter and raising its outlook for the 12 months.
Here’s how the company did compared with Wall Street analysts’ expectations, in response 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 12 months 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 12 months, up from its previous guidance of 12% and better 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 each investors and employees. The company didn’t share additional details on his departure throughout the earnings call, but Benson confirmed the seek for his successor is “going well.” Planet Fitness shares have recovered since Rondeau’s departure, but remain down greater than 20% 12 months to this point.
Benson outlined Planet Fitness’ forward-looking growth strategy within 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 recent 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.”
Latest 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 6 months.
- reequip periods prolonged to unencumber capital and reduce store spending.
“We predict ultimately this was the most effective set of changes that we could develop to enhance to unencumber some money,” CFO Tom Fitzgerald said on the decision. “To take a position in recent store growth, improve the shop returns of those recent stores.”
Fitzgerald also confirmed the company is experimenting with price increases for its “Classic Membership,” from $10 to $15, in greater than 100 test markets.
“At the top of the day, our criteria is we don’t need to sacrifice member growth,” he said.
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