Planet Fitness Banks on Strategic Initiatives Amid High Attrition

Planet Fitness, Inc. PLNT continues to execute on its strategic priorities and capitalize on growing opportunities in an evolving fitness landscape. A strong marketing engine, robust franchise expansion and higher equipment sales remain key drivers of the company’s long-term, sustainable growth.

However, elevated member attrition tied to its new “click-to-cancel” policy, ongoing inflationary cost pressures and rising competition for premium real estate locations continue to pose challenges.
  
Shares of this premium fitness center chain have gained 3.4% in the past six months, outperforming the Zacks Leisure and Recreation Services industry’s 0.9% rise. Its earnings topped the Zacks Consensus Estimate in three of the trailing four quarters, missing on only one occasion, the average surprise being 7%.

The earnings estimate for 2025 has moved up to $2.99 per share from $2.93 in the past 30 days. Despite ongoing inflationary pressures and intensifying competition, the stock maintains a favorable trajectory, supported by operating efficiencies and margin improvement that strengthen expectations for absolute earnings growth.

Planet Fitness — a Zacks Rank #3 (Hold) stock — has a favorable VGM Score of B. 

Let’s take a closer look at the key factors supporting the stock’s performance and the challenges that may hold it back.

Factors Aiding PLNT Stock

Low-Cost Franchising Strategy: Planet Fitness’ low-cost, high-value franchise model continues to be a powerful driver of its long-term growth. Franchisees are actively expanding through new club openings, remodels and re-equips, reflecting confidence in the brand’s image and the stability of its cash flows. The company noted that conversions of regional gyms into Planet Fitness locations have also become an effective strategy, allowing franchisees to enter new markets quickly with a built-in member base. Noting that the company opened 35 new clubs in the third quarter and ended the period with approximately 2,795 locations and 20.7 million members.

In addition, the record-breaking participation in the 2025 High School Summer Pass program — where more than 3.7 million teens completed over 19 million free workouts — further validates the appeal of Planet Fitness’ accessible, value-driven model. This initiative not only strengthens brand affinity among younger consumers but also reinforces the long-term benefits of its low-cost, high-value approach.

Strategic and Marketing Initiatives: Planet Fitness’ ongoing initiatives continue to reinforce its growth trajectory and strengthen its competitive position. The company remains focused on four key strategic imperatives: redefining its brand promise, elevating the member experience, optimizing club formats and accelerating new club development.

To strengthen its brand image, Planet Fitness continued its “We Are All Strong on This Planet” campaign, emphasizing its best-in-class equipment, welcoming environment and supportive community. Management also highlighted the impact of high-visibility brand-building events, including the company’s 11th consecutive sponsorship of New Year’s Rockin’ Eve — an opportunity that puts Planet Fitness on a global stage precisely when consumers are thinking about their health and fitness goals.

Increased Focus on Digitalization: Planet Fitness is accelerating its digital transformation to strengthen member engagement, improve operational efficiency and enhance marketing effectiveness. Management emphasized that digital capabilities — particularly the use of artificial intelligence — are becoming a core pillar of the company’s long-term growth strategy. A key initiative is the development of AI-enabled CRM tools that will enable more targeted, data-driven communication across its 20.7 million-member base. The company is also embedding AI capabilities into its widely used mobile app, which management noted is among the most downloaded fitness apps in the App Store. These enhancements aim to deliver a more personalized experience for every member, including customized workout plans, better in-club guidance and digital tools that support fitness routines outside the gym. This heightened personalization is expected to drive stronger utilization and engagement — critical factors that contribute to higher member retention.

Factors Hindering Growth of PLNT Stock

Membership Attrition and the “Click-to-Cancel” Effect: Planet Fitness continues to face elevated attrition following the rollout of its “click-to-cancel” policy. Although management noted some moderation, churn remains higher year over year and continues to pressure net member growth. While the policy improves transparency and can boost join conversions, it also makes cancellations easier, creating a persistent headwind for the company.
 
High Costs & Inflation Woes: Planet Fitness continues to experience elevated cost pressures, amplified by expansion-related investments and inflationary trends. In the third quarter of 2025, the cost of revenues rose 27.3% year over year to $58.2 million, driven by increased equipment sales tied to new club openings and re-equipment cycles. Corporate club operating expenses also climbed 11.4% to $79.8 million, reflecting the addition of 30 company-operated clubs since mid-2024, including 10 in Spain. Furthermore, national advertising fund expenses grew 8.7% year over year to $21.4 million as the company continued to invest in broader marketing efforts. These rising costs remain a notable headwind to margin expansion.

Better-Ranked Stocks

Some better-ranked stocks from the Consumer Discretionary sector are Las Vegas Sands Corp. LVS, Crocs, Inc. CROX and Amer Sports, Inc. AS.

Las Vegas Sands presently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 14.4%, on average. LVS stock has rallied 27.9% year to date. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for LVS’ 2025 sales and earnings per share (EPS) indicates growth of 11.9% and 29.5%, respectively, from the year-ago period’s levels.

Crocs flaunts a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 14.3%, on average.  Crocs stock has declined 26.6% year to date.

The Zacks Consensus Estimate for Crocs’ 2025 sales and EPS indicates a decline of 2.4% and 7.9%, respectively, from the prior-year levels.

Amer Sports sports a Zacks Rank of 1 at present. The company delivered a trailing four-quarter earnings surprise of 78%, on average. AS stock has jumped 29% year to date.

The Zacks Consensus Estimate for AS’ 2025 sales and EPS indicates growth of 25% and 93.6%, respectively, from the prior-year levels.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research