Planet Fitness increases the price of its Black Card membership but still offers a $10 option

Planet Fitness Inc. lifts. Its Black Card membership price this month, bringing the monthly fee to $24.99 for new members.

The decision to raise the price from the previous $22.99 comes after testing at 100 sites last summer.

The gym franchise owner will still offer a standard membership for $10 per month. Even with the least expensive option, Planet Fitness PLNT,
+ 3.31%
He says six out of 10 members chose the more expensive plan.

“Within a 10-mile radius of the current Planet Fitness store, there are approximately 140 million people of gym age who are not affiliated with any gym,” Chris Rondo, general manager of Planet Fitness, said during the earnings call. to FactSet. .

“With fewer competitors due to greater industry consolidation, we believe our 4,000 potential stores in the United States could be the floor, not the ceiling, for store growth.”

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Planet Fitness also caters to younger potential members with a program that provides high school students with free membership all summer long. In a statement, Rondeau said the high school summer ticket gives teens an outlet during the country’s current teen mental health crisis. The program is returning after its hiatus for the past two years.

On the earnings call, Rondeo added that several teens who participated in the program became members.

“The program has attracted nearly one million teen participants and more than 11% of those teens are members today,” he said.

Membership totaled 16.2 million at the end of the quarter.

Planet Fitness is also expanding outside the United States, with a new deal in New Zealand for at least 25 locations over the next few years, and first openings in Mexico, with at least 80 locations planned over the next five years.

Planet Fitness posted first-quarter earnings that beat expectations but lost revenue. Rondeau highlighted the “highs and lows” in the quarter, but said there was a recovery in usage and new members during the period.

“Post-COVID fitness trends and member additions show that Generation Z/Millennials groups are gravitating more toward fitness than previous generations, as the company works to capitalize on this demand,” JPMorgan wrote in a note.

With inflation soaring, analysts say members may be looking to move into an affordable health club.

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“The desire for perks has not stopped, as the weight of inflationary pressures on the consumer has the potential to shift demand from expensive stores/clubs to value-oriented Planet Fitness,” said JPMorgan.

JPMorgan has upgraded Planet Fitness stock from neutral to overweight, with a target price of $90.

“[W]We see an opportunity for upcoming initiatives, including the High School Summer Pass […]Bird analysts wrote improving marketing (after local fulfillment challenges during the first quarter) and pricing (not expecting Black Card mix to decline after up to $24.99 per month for new memberships) to support continued winning members/contestants in the coming quarters.”

Bird thinks Planet Fitness outperforms with its $92 price target, down from $108 previously.

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“This is the first large-scale increase since 2019 when the price increased by $1, and before that there was a $2 increase in 2017,” BMO Capital Markets wrote.

“Using these previous increases as a benchmark, management has indicated that
Historically, the acquisition of Black Card has been “relatively stable” sequentially, but Black Card penetration continues to grow year after year.

BMO Capital believes Planet Fitness shares are outperforming with a price target of $88, down from $96 previously.

Planet Fitness stock is up 3.7% on Wednesday and is down 22.4% since the beginning of the year.

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