Planet Fitness cites flu, commercials and an incident in Alaska for Soft Q1

Shares closed up 5.6% to $65.32 after trading as low as $59.16 during the session. They are down 10.5% so far this year.

Interim CEO Craig Benson told analysts Thursday that a number of challenges hurt first-quarter results, including a spike in flu cases earlier in the year that led to a decline in new sign-ups and an ineffective advertising campaign that didn’t act included prices and “reduced the urgency for consumers to get off the couch and get involved.”

The company recorded a fewer-than-expected 900,000 new members in its typically highest pre-Covid net growth quarter, which Benson attributed to media reports of rising Covid-19 cases, RSV and other respiratory infections “which may have caused people to be hesitant to go public in the first half of January.” Places to go, including gyms.”

Benson also said public disclosure of a March 11 incident at one of its Alaska gyms involving a transgender-inclusive restroom policy may have led to a drop in new memberships and some cancellations in March. Some critics called for a boycott, and there were bomb threats in other places. The incident was briefly shared on social media.

Benson said the policy has been in place for more than a decade and is comparable to what other fitness centers like the YMCA are doing.

New CEO Colleen Keating, former CEO of FirstKey Homes, will join the company on June 10. Benson remains on the board.

Raymond James analyst Joseph Altobello, who rates the stock a Strong Buy, said Planet Fitness has continued trading despite challenges that include “cautious consumer spending, concerns about a surge in COVID infections and other illnesses, and nationwide advertising.” , reported healthy numbers for the first quarter campaign that was less effective than
expected.”

Planet Fitness ended the quarter with approximately 19.6 million members, same-store sales growth of 6.2% and earnings before interest, taxes, depreciation and amortization growth of nearly 18%. The company added 25 new locations, for a total of 2,599 locations worldwide.

Planet Fitness expects revenue to increase 4% to 6% in 2024, below its previous forecast of 6% to 7%. Adjusted earnings per share are expected to rise 7% to 9% (previously 10% to 11%), and same-store sales are expected to rise 3% to 6%, compared with the previous forecast of 5% to 6%.

Write to Janet H. Cho at [email protected]