Planet Fitness admitted it suffered a “fairly significant” drop in membership sign-ups after one of its gyms unleashed a media firestorm by allowing a transgender customer to shave in the women’s locker room — and the company plans to hike prices by 50%.
Executives slashed its forecasts for sales and profits on Thursday, blaming in part the March 11 incident at a Planet Fitness in Fairbanks, Alaska that went viral after outraged member Patricia Silva posted a video about confronting the transgender customer.
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“And then once social media sort of blew up over our policy issue, we definitely saw a change in the results in the back half of March. Joins and cancels were fairly significantly affected.”
The company ended the quarter with 19.6 million members — an 8% increase from a year ago that missed internal expectations, according to DA Davidson analyst Linda Bolton Weiser. The company also saw a double-digit drop in traffic to its website, Bolton Weiser said in a research note.
Planet Fitness said it now expects this year’s revenue to rise by 4% to 6%, compared with its previous estimate of a 6% to 7%. It forecast that profits will be up between 7% and 9%, compared with its previous estimate of a 10% to 11% increase.
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“Media mentions relating to the incident peaked in the middle of March, which we believe contributes to some of the softness we saw in joins for the balance of the month as well as some increase in cancels,” Benson said.
He added: ”The good news is we’ve seen the joins rebound, but cancels have remained elevated.”
Still, the company, famous for its inexpensive $10 membership fees, said it’s raising pricing to $15 for new members beginning in the summer — the first hike since 1998. Planet Fitness had been testing higher prices in some markets before the uproar.
“It will take some time for the benefit of the price change to expand our store level margins as the price increase will only be on new classic card memberships,” said Fitzgerald, who is retiring in August.
Silva unleashed the backlash after snapping a photo of the transgender customer in the women’s locker room. Later, she posted a video in which she said that while the transgender customer was shaving a young girl sat on a bench with a towel wrapped around her and looked uneasy or “frightened.”
In response, Planet Fitness revoked Silva’s membership the next day for violating the gym’s policy of taking photos inside the gym. Meanwhile, the company assigned an employee to accompany the transgender customer to the women’s locker room.
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The decision sparked an outcry around the country, with the company reportedly getting dozens of bomb threats nationwide. The company’s market value plunged by more than $400 million amid boycott calls.
Benson said on Thursday that its policy is not dissimilar from other gyms, including the YMCA.
Next month, Colleen Keating, who had required employees to undergo “unconscious bias training” and supported “hiring through a DEI lens” at her previous company, will replace Benson as the new CEO.
In September, longtime CEO Chris Rondreau was unexpectedly ousted. In February, he left the board as the company slashed 9% of its workforce.
* Original Article:
https://nypost.com/2024/05/10/business/planet-fitness-membership-losses-significant-after-transgender-situation/?utm_source=smartnews&utm_campaign=nypost&utm_medium=referral
