HAMPTON, N.H. - Planet Fitness, Inc. (NYSE: NYSE:PLNT) experienced a 11% decline in stock value today, following the announcement of its first quarter financial results and a downgraded outlook for the year.
The fitness center operator reported an adjusted EPS of $0.53 for the quarter, narrowly beating analyst estimates by $0.02. However, revenue for the quarter fell short at $248 million, missing the consensus estimate of $250.63 million.
The company's total revenue saw an 11.6% increase from the same quarter last year, reaching $248.0 million, bolstered by a system-wide same store sales growth of 6.2%.
Despite the revenue growth, the market responded negatively to the softer sales and the company's revised full-year guidance.
The stock plummeted by 11%, indicating investor concerns over the company's future performance.
Interim CEO Craig Benson cited several factors that impacted the quarter, including consumer focus on savings, increased COVID infections, and a national advertising campaign that may not have resonated as expected.
"We are lowering our outlook for the full year," Benson stated, acknowledging the challenges while emphasizing the company's focus on strategic priorities and shareholder value.
For the year ending December 31, 2024, Planet Fitness now anticipates system-wide same store sales to be in the 3% to 5% range, a decrease from the previously expected 5% to 6%. Revenue growth expectations have also been adjusted to a 4% to 6% increase, down from the initial forecast of 6% to 7%.
Adjusted EBITDA and adjusted net income are now expected to rise in the 7% to 9% and 6% to 8% ranges, respectively, marking a reduction from earlier projections.
The first quarter saw the opening of 25 new stores and a $20 million share repurchase, ending with approximately 19.6 million members. Net income attributable to Planet Fitness was $34.3 million, or $0.39 per diluted share, up from $22.7 million, or $0.27 per diluted share, in the prior year period.
Adjusted net income also rose to $47.3 million, reflecting a 29.9% increase from last year's $36.4 million.
Despite the downbeat forecast and market reaction, Planet Fitness is preparing for a leadership transition with the arrival of Colleen Keating as the new CEO in June.
With over three decades of experience, Keating is expected to guide the company through its next growth phase.
Investors will be closely monitoring the company's performance in the coming quarters, as the fitness chain navigates the headwinds and strives to meet its adjusted expectations for the year.
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