Planet Fitness Reports 30 Percent Revenue Decline in Q4 2020, 41 Percent Decline for the Year

Planet Fitness
Much of the quarterly revenue decline was due to lower equipment revenue, but temporary club closures due to COVID-19 and lower membership levels also had an impact. (Photo courtesy Planet Fitness.)

Planet Fitness reported fourth quarter 2020 revenue of $133.8 million down $57.7 million or 30.1 percent compared to $191.5 million in fourth quarter 2019, the company announced last week.

Of the $57.7 million decrease, $49 million or 85 percent was attributable to lower equipment revenue from franchisees. The remainder of the year-over-year decline in total revenue was primarily due to the impact from temporary club closures due to COVID-19 and lower membership levels, Fitzgerald said.

For the year, total revenue decreased by 41 percent from $688.8 million 2019 to $406.6 million in 2020.

Franchise segment revenue in 2020 decreased $71.4 million or 25.7 percent to $206.2 million from $277.6 million in the prior year primarily as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as reduced membership levels and lower equipment placement revenue, according to the announcement.

Corporate-owned stores segment revenue for 2020 decreased $42.6 million or 26.6 percent to $117.1 million from $159.7 million in the prior year, primarily as a result of temporary store closures related to COVID-19 beginning in March 2020, as well as reduced membership levels, partially offset by revenue as a result of the acquisition of 16 franchisee-owned stores and the opening of 11 new corporate-owned stores since Jan. 1, 2019.

Equipment segment revenue decreased $168.2 million or 66.9 percent for the year to $83.3 million from $251.5 million in the prior year, driven by lower equipment sales to new and existing franchisee-owned stores primarily as a result of COVID-19 related closures beginning in March 2020, and the 12-month and 18-month extensions Planet Fitness gave to franchisees for all new store development and re-equipment investment obligations, respectively.

The company ended December with approximately 13.5 million members, down 0.9 million from where it ended 2019. This compares to 15.5 million members at the end of first quarter 2020, 15.2 million at the end of second quarter 2020, and 14.1 million at the end of third quarter 2020. The decline in memberships was primarily a function of lower gross new joins as Planet Fitness paused its national acquisition marketing efforts between March and September while the majority of clubs were temporarily closed. The average number of cancels per club in 2020 was consistent with 2019, according to Tom Fitzgerald, chief financial officer for Planet Fitness, who shared the information in a call with analysts.

In the fourth quarter, the company opened 41 clubs for a total of 130 clubs opened in 2020, which was down from 102 clubs opened in fourth quarter 2019 and 261 clubs opened in all of 2019.

The company’s primary focus for the last quarters of 2020 was on reopening stores that had been closed in first and second quarters due to COVID-19 and on restarting its national acquisition marketing efforts in September.

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