Planet Fitness shares have declined for a sixth consecutive day, down roughly 18% week-over-week and 60% year-to-date, as lackluster second quarter results and intensifying competition in the high-volume, low-price fitness industry weigh on the stock. For the most recently reported quarter, the company beat EPS estimates and generated 7% more in sales, but growth came with higher operating costs and increased advertising expenses. Management acknowledged that higher same-club sales were largely driven by a price hike to its Classic Membership, from $10 to $15, rather than increased membership, and that the increase pushed some potential members toward competitively-priced rivals. Deutsche Bank analyst Chris Woronka warned that competitors are differentiating themselves through group classes, recovery spaces, social areas and ambiance appealing to younger gym members, while GLP-1 use by older cohorts keeps growth stagnant, adding that matching rivals may be exceedingly difficult since 90% of Planet Fitness units are franchised. Seeking Alpha analyst Sorrento Research noted the company's recent marketing message geared toward more hard core fitness customers may have detracted from its core customer base.
Planet Fitness IncRivals differentiate via group classes, recovery spaces and ambiance, and 90% franchised units make matching them exceedingly difficult.
Deutsche Bank Aktiengesellschaft