Planet Fitness Surges on Earnings Beat, Here What’s In Store Next
Brian Sozzi
Planet Fitness (PLNT) - Get Report pumped up Wall Street with its third quarter results.
The discount gym chain, which went public on the New York Stock Exchange in early August, reported net sales of $68.8 million vs. consensus expectations of $66.3 million. Adjusted earnings came in at 10 cents a share, surpassing analysts' forecasts of 9 cents a share. Same-store sales rose 6.9% year over year. Shares of Planet Fitness surged 12% in early trading on Friday.
But, the number of Planet Fitness members at its over 1,000 gyms across 47 states in the nation clocked in at 7.1 million for the quarter, relatively unchanged from 7.2 million in the second quarter. Planet Fitness CEO Chris Rondeau explained, "It's normal seasonality in the gym industry. You sell most of the memberships in April through May and, then, they tail off during the summer months -- now the number will start to rise as we head into January due to New Year's resolutions."
For the year, Planet Fitness now sees earnings in the range of 51 cents a share to 52 cents a share, up from its previous forecast of 47 cents a share to 48 cents a share offered three months ago.
Planet Fitness is pulling out all of the stops this year, as it seeks to entice consumers who want to burn off the blubber right from the get go in 2016. The company will be the presenting sponsor of the Times Square New Year's Eve Celebration in New York City, handing out thousands of branded hats and balloons to party goers with its trademark purple and yellow colors. Furthermore, Planet Fitness will be featured on "Dick Clark's New Year's Rockin' Eve with Ryan Seacrest" live television show.
"We are looking for a really strong January," said Rondeau. But Planet Fitness is also thinking beyond January 2016, in its bid to satisfy the new demands of Wall Street.
The company's franchisees have signed agreements to open more than 1,000 additional stores over the next seven years, including roughly 500 over the next three years. Rondeau said the U.S. has the potential for over 4,000 locations, up from about 1,040 today.
Planet Fitness is also beginning to dip its toes into international waters, having opened two stores in Canada since 2014. Five more stores in Canada are under construction, and the company sees the market as a 300-store opportunity over time. Planet Fitness is also preparing to open its first store in the Dominican Republic this month. "Pre-sales (memberships) have exceeded my expectations," said Rondeau.
In explaining as to why opening gyms in the Dominican Republic makes sense, Rondeau said, "In the U.S., 80% of the population doesn't belong to a health club - over there it's almost 98%." Rondeau hinted that Planet Fitness may be eyeing Mexico next for its new stores, a country where the obesity rate of 32.8% is higher than the U.S. at 31.8%.