Planet Fitness Plans Huge Expansion, Targeting Sites Left When Other Retailers Go Under
Gym chain Planet Fitness is planning to open a total of 225 new locations this year, some of which will be in sites formerly occupied by Toys R Us or Sears, though the company has not specified where all of those locations will be.
For Planet Fitness, retail closures can mean opportunities for new locations.
"Looking ahead, real estate trends appear to remain in our favor as many brick-and-mortar retailers continue to close stores and landlords are increasingly looking to Planet Fitness as key tenants who drive traffic to their centers," Planet Fitness CEO Chris Rondeau said during the company's quarterly earnings call in February.
Last year, Rondeau articulated a similar notion when he said that the gyms drive traffic and "we can't be Amazoned."
Planet Fitness is currently working with retailers who are looking to downsize in markets in which the gym chain is looking to expand, according to Rondeau. Toward that end, the company has hired a handful of in-house real estate brokers to source sites.
Recently the Hampton, New Hampshire-based fitness specialist announced a collaboration with retailer Kohl's to open as many as 10 Planet Fitness locations adjacent to Kohl's stores in 2019, and perhaps more after that.
During the company's Q1 2019 earnings call this month, Rondeau said those locations will occupy about 20K SF to 25K SF each in various markets nationwide.
"This complementary partnership made strategic sense to both brands," Rondeau said.
As Planet Fitness continues to grow, pairing with Kohl's is an opportunity to introduce shoppers to the company's fitness concept, while simultaneously driving traffic to Kohl's stores.
In fact, Rondeau said, his company's research shows that its members tend to stay nearby for shopping after visiting a Planet Fitness. Seventy-six percent of members combine gym visits with other shopping, the gym says, while 89% of members shop at other retailers within their gym's shopping center.
"In today's retail landscape, we believe our differentiated approach to fitness continues to drive traffic to our shopping centers across the country, which is why partners like Kohl's are interested in looking at a PF become tenants in their centers," Rondeau said.
The company has already gotten off to a strong start this year, opening 65 locations during the first quarter, and ending Q1 with more than 13.6 million members and more than 1,800 locations.
Planet Fitness's first-quarter 2019 revenues of $148.8M represented a 22.7% increase year over year, and the company expects a 15% increase for the full year. Same-store sales were up 10.2% compared with a year ago, the latest quarter in 12 straight years of annual sales growth.
Investors are responding. Shares of Planet Fitness have ballooned by more than 400% over the last four years.
While Planet Fitness was mum on exactly where the 225 gyms will go, it announced five locations in Northern Virginia Wednesday, all filling suburban big-box vacancies.