People exercise at Planet Fitness on January 8, 2024 in Alexandria, Virginia.
Leah Millis | Reuters
planet fitness The company has announced it will increase basic-level membership prices for new customers for the first time since 1998, despite gym operators warning that customers are becoming increasingly cost-conscious.
Classic card membership fees will be $15 per month for new members starting this summer. Planet Fitness announced Thursday along with its quarterly earnings report that current members will continue to pay $10 per month “for the duration of their membership.”
Tom Fitzgerald, the company’s outgoing chief financial officer, said: “Because the price increases only apply to new Classic cardmembers, it will take some time for store-level margins to benefit from the price changes.” Deaf,” he said.
The change comes after months of price testing in several markets across the country. Planet Fitness also announced this summer that it will begin testing a higher price for its top-tier membership, known as the Black Card. This membership gives customers access to all Planet Fitness locations, as well as digital content and other benefits, for a starting price of $24.99 per month.
The decision to raise prices came after the company, in contrast to its competitors, reported lower-than-expected first-quarter revenue and lowered its outlook for the fiscal year. Lifetime Holdingsdelivered better-than-expected results and strong membership growth in its most recent quarter.
While Lifetime members tend to be older, more affluent gym-goers, Planet Fitness appeals to younger, more budget-conscious consumers.
Craig Benson, the company’s interim CEO, said in the earnings call that several macro environments are weighing on consumers who are becoming more cost-conscious.
“We faced several headwinds that impacted our results, including consumer focus on savings in the new year and concerns about an increase in COVID-19 infections and other illnesses,” Benson said. .
He also said the company’s national advertising campaign did not resonate with as wide a range of consumers as expected.
Despite the warning, analysts still see positive catalysts ahead for the company.
“Despite the lower guidance, today’s results were not as weak as feared,” Piper Sandler analyst Colin Wolfmeyer said. “And we have now seen two important changes take place that are necessary to replenish the stock, including a new CEO and white card pricing.”
Piper Sandler has a “buy” rating on Planet Fitness shares, with an unchanged price target of $80. The stock is currently trading at about $65 per share, up more than 5% on Thursday.
TheStreet is bullish on Planet Fitness’ next CEO, Colleen Keating, who will take over on June 10th, to rebuild the company.
“We believe our new CEO’s past experience building brands and leading consumer-facing companies will be helpful here,” Wolfmeyer said.
