Yet another CEO turnover.
On Friday, Planet Fitness’s (PLNT) board announced the decision to “transition to new leadership,” resulting in the departure of 30-year company veteran and CEO Chris Rondeau.
“As we enter the next chapter of Planet Fitness’ journey, the Board felt that now was the right time to transition leadership,” Stephen Spinelli, Jr., the board’s chairman, said in the release.
As the company looks for new leadership, six-year board member Craig Benson was named interim CEO, effective immediately. Benson previously served as New Hampshire governor and is a franchisee of both Planet Fitness and Dunkin’ Donuts. The company said it is considering both internal and external candidates.
Planet Fitness is the latest company to shake up its C-suite, and it’s something Wall Street isn’t taking lightly. On Friday, Planet Fitness stock plunged as much as 16%, hitting a 52-week low. The stock was also a trending ticker on Yahoo Finance.
Planet Fitness declined to respond to Yahoo Finance’s request for comment.
While no exact reason for Rondeau’s immediate departure was given, throughout his decade-long tenure, Rondeau was credited with growing the fitness center’s membership by over five-and-a-half times to 18.4 million members and its footprint by four times to more than 2,400 stores.
He also nearly quintupled revenue to a projected $1 billion-plus this year, from $200 million in 2013, and took the company public in 2015, William Blair analyst Sharon Zackfia said in a note. Since the company’s IPO, shares have more than tripled.
In the release, Rondeau called his career at Planet Fitness “an incredible ride,” thanking employees, franchisees, and members. He will continue to serve as a member of the board and will be nominated for reelection at the company’s 2024 annual meeting.
Wall Street stunned by Rondeau’s departure
The sudden C-suite change appeared to take Wall Street by surprise.
“The catalyst for the shift in leadership is uncertain,” William Blair analyst Zackfia said. “It is also abrupt and does not appear planned, as the company canceled two planned investor conference presentations this week and the decision was characterized as the board’s and not Rondeau’s.”
As far as who the board could tap as the next CEO — that’s unclear too.
“We do not know of any heir apparent internally and instead suspect the board will seek out an external candidate with strong franchised experience (we do not view fitness club experience as necessary given Planet’s unique go-to-market strategy versus the peer group),” Zackfia added.
It also raises questions about the company’s strategy moving forward, Cowen analyst Max Rakhlenko wrote in a note on Friday.
“The shake up increases uncertainty as Mr. Rondeau has been with PLNT for 30 years with 10 as CEO,” Rakhlenko wrote. “Board member Craig Benson was appointed as Interim CEO and his experience as a PLNT franchisee positions the company well during the search. That said, PLNT is working through a challenging stretch, and this period will delay new strategy implementation.”
Still, Zackfia mentioned the change could unlock better returns for the company — something Stifel analyst Chris O’Cull echoed in a new note.
“While the timing of the announcement was surprising, we believe the leadership transition could set the stage for a faster pace of change, with certain elements of the model — such as raising the price of the Classic Membership package — potentially now on the table for consideration,” O’Cull said.
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