Can Planet Fitness Be A Covid Winner Too???
Planet Fitness Inc is a franchisor and operator of fitness centers in the United States. It has approximately nine million members and more than 2000 stores in 47 states, the District of Columbia, Puerto Rico, Canada and the Dominican Republic.
Over the years Planet Fitness has been growing like wildfire. Plant Fitness was founded back in 1992 and didn't sell it's first franchise until 2003. In 2006, the company opened its 100th store and had 500,000 members. In six short years, the company had 500 stores. In 2014, the company opened its first international store in Canada. Membership at this point exceeded 1.5 million. Planet Fitness debuted on the Stock Market in 2015 with membership now exceeded 10 million. Planet Fitness wants to have 4,000 gyms in the US when it’s all said and done.
This past year COVID-19 has wreaked and continues to wreak many industries and including the fitness sector, pending what side of the demand equation one sits. We have seen, National gym chain 24 Hour Fitness filed for bankruptcy, after the Covid-19 pandemic forced its facilities to shutdown for months. Gold's Gym, a similar chain to 24 Hour Fitness, filed for bankruptcy in May. New York Sports Club and Town Sports International and other chains, at a minimum have laid off employees.
Because Planet Fitness is a public company, their economy of scales is helping them deal with COVID-19. As we know the real winner has been Peloton. Peloton’s revenue increased 66% last quarter as more people purchased its fitness equipment and tuned into its live classes. In addition, Peloton offers non-bike classes as well. As a result, Peloton raised its 2020 outlook for paid subscription to 1 million from 925k.
But according to a Barron's article they think Planet Fitness can be a winner too.
The Covid-19 pandemic has closed gyms, pushing consumers to work out at home. But an analyst at Macquarie is bullish on both Peloton Interactive and Planet Fitness.
But if consumers combine Peloton’s at-home instruction with a low-cost gym membership, Planet Fitness could actually stand out, according to Golding. We think Planet Fitness is poised to become the de facto bricks-and-mortar gym for many looking to diversify their fitness offerings,” Golding wrote.
Pointing to industrywide struggles, Golding thinks Planet Fitness can benefit from consolidation.
“We think certain swaths of the competitive landscape like midtier gyms as well as boutiques and studios are likely to be affected by the secular shifts toward virtual fitness, leaving fewer brick -and-mortar alternatives to Planet domestically (especially at these price-points), and leaving more real estate available for Planet franchisees to take advantage of,” he wrote.
Now that's all fine and well, but you still need people like me to return to Planet Fitness. I have been a Black Card member since 2018. But today, I bought a BowFlex kettleball from Walmart to help me get my "Springs" (jumping ability) back in time for Spring.
Hopefully this is my last addition to my garage / converted gym. I truly have everything I need to the point, I don't really need any gym to help me get back my "Springs."
This might be just be the new normal, which will dictate Plant Fitness' membership growth number. Until we breach the weekly up trendline, I'm bearish on Planet Fitness.
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