Good News as Planet Fitness Raises Prices

By Douglas A. McIntyre Published May 10, 7:10AM EDT

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Good News as Planet Fitness Raises Prices — © Andrew H. Walker / Getty Images

Gym outlet Planet Fitness Inc. (NYSE: PLNT | PLNT Price Prediction) posted strong numbers for the most recently reported quarter. Revenue rose 11.6% year over year to $248 million, and same-store sales increased 6.2%. Earnings rose from $0.27 per share to $0.39.

The most important part of the earnings release was a new way for Planet Fitness to earn money. According to CNN, “Planet Fitness will raise the price of its ‘classic’ membership from $10 a month to $15 for new members beginning in the summer.” This type of membership gives people access to only one location. It has not raised this rate in over two decades.

The stock got a bump after earnings but is still down 11% this year to $55 per share. One reason is that the gym business is so competitive. Additionally, some members also left because of a dispute over a trans-inclusive bathroom policy, which triggered boycotts. (Check out a ranking of millennials’ 15 favorite brands.)

Why should investors believe Planet Fitness has a promising future? It is because of its “pricing power.” Few companies can raise the price of a service by 50% with confidence that it will not erode their customer base, but Planet Fitness clearly believes it can.

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.