People exercise at Planet Fitness in Alexandria, Virginia, on January 8, 2024.
Leah Millis | Reuters
Actions of Planet Fitness plunged more than 30% Thursday after the company reported a drag on enrollment and lowered its guidance.
The stock was having its worst day ever, at midday.
Even though the fitness company saw 21.9% revenue growth in its fiscal first quarter and same-club sales increased 3.5%, CEO Colleen Keating said the company saw a “slower start than expected from a net member growth perspective.”
“As a result, we are fine-tuning our marketing to prioritize capturing demand and driving net member growth,” Keating said in a statement. “In addition, we are pausing the planned domestic Black Card price increase pending a broader pricing review.”
The first fiscal quarter is typically the company's busiest enrollment period. Keating said “internal and external headwinds” dealt a blow to the company's performance.
Planet Fitness cut its revenue growth projection to 7% from a previous estimate of 9%. It also now expects intra-club sales to be just 1%, compared to previous expectations of 4% to 5%, and adjusted net income to decline 2%, compared to a previously expected increase of between 4% and 5%.
In a call with analysts Thursday, Keating said four factors affected the company's performance in the first quarter: a lack of marketing resonance, competition in some markets, poor weather conditions and macroeconomic pressures.
“We're making immediate, short-term adjustments to expand our reach and ensure our messaging is visible and resonates with the fitness novice and the more casual gym-goer,” Keating said on the call.
Keating also reaffirmed the company's confidence in its strategy to return to long-term growth. He said Planet Fitness is focusing this year on driving member acquisition and bolstering affordability.
“Looking at data from the fourth quarter of last year and the first quarter of this year, we saw that our messaging and segmentation were successful in driving greater penetration among the fitness-conscious consumer, but we may have pivoted too much,” he said.
