Planet Fitness looks to get people back to the gym

Yahoo Finance's Brian Sozzi sat down with Planet Fitness CEO Chris Rondeau to discuss the company's quarterly report and the future of gyms. He shares what he learned with Alexis Christoforous on The First Trade.

Video Transcript

ALEXIS CHRISTOFOUROS: But I want to get to another stock on our radar this morning, and that's Planet Fitness, Brian Sozzi, because that's not coming under some pressure here. It's off about 2%, dealing with a crushing second quarter earnings report, larger than expected loss. Tough to get those gyms back up and running and people to get into those gyms during the pandemic.

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I know you were able to talk to somebody at the company. What did they have to say?

BRIAN SOZZI: Yeah, Alexis, last night I caught up with Planet Fitness CEO Chris Rondeau. It's interesting because tomorrow it will be five years since him and I were on the floor of the New York Stock Exchange for the company's big IPO day. And Planet Fitness has been a tremendous growth story ever since that day in terms of the stock, in terms of new store openings.

And I told him, Chris, I never thought I'd see a quarter like this where your sales are down 77.9% and you go to a $0.32 per share loss from a $0.45 share profit a year ago. And I think he's been surprised too. But he did tell me they have over 1,400 gyms. They have over 2,000 in total, but 1,400 gyms are reopened. So people are slowly coming back into the gym. He is working out in his local gym in New Hampshire. But they're coming back slowly.

And I think for them, it's a matter of getting people comfortable with coming into the gym, looking at the new safety protocols, and realizing that, yes, they might be able to work out there, not as much as they used to. But maybe they can go in there once or twice a week and then also work out at home.


ALEXIS CHRISTOFOUROS: And then what does that mean for the working out at home industry? I mean, I'm thinking Peloton, for instance. I mean, I would have to imagine they continue to benefit from the fact that a lot of these gyms either can't open or people are just too skeptical about going back.

BRIAN SOZZI: Well I do think the pandemic, Alexis, has forced Planet Fitness to finally really go all in more on digital and on their app, for example. One sign of the after effects of the pandemic, you can log onto their app and check capacity at your local gym. If you're not comfortable, you do not have to go in there. But overall, what is interesting, I asked him, how many more gyms do you expect to open. He says we still have 1,000 gyms in our development pipeline. So despite the pandemic, this company is still full steam ahead.

And the bottom line is this, a lot of gyms have went bankrupt, went bust. And why the stock hasn't fallen more below, let's say, $50 from the high of 87 in February, there's a lot of optimism they'll be the only national gym chain open when all this is said and done. And that's a good place to be.

ALEXIS CHRISTOFOUROS: That's a lot of gyms, though, right, in the pipeline to still want to have going. You know what I wonder, what does this all mean for like a Lululemon or Nike when it comes to athleisure wear. If we're not going to be going to the gym to work out, we could just stay at home, I guess, and workout in whatever, right?


BRIAN SOZZI: Well, don't use me as a good example. I'm still out there buying clothes to workout on my Peloton bike, I'm just saying. But you're exactly right. If we're not going to the gym in our cool new clothing-- I always wanted to show off in the gym with my new clothing, my new sneakers. But I realize less frequently to the gym, maybe you need a few less outfits. That's just the reality of it.

ALEXIS CHRISTOFOUROS: Always the fashion plate, even on his Peloton, Brian Sozzi, thank you.