Shares of Planet Fitness, the prominent gym chain recognized for its affordable fitness solutions, witnessed a significant surge during Tuesday afternoon trading after the company confidently reiterated its robust full-year outlook. The news followed the release of its second-quarter results, which showcased stronger-than-expected increases. Planet Fitness is projecting a revenue growth of 4% to 6% for 2024, positioned against the strong backdrop of 2023's revenue of $1.07 billion.
Analysts, through a survey by Capital IQ, anticipate that the company's revenue will reach approximately $1.13 billion for the current fiscal year. This strong confidence was reflected in the market, with shares climbing by an impressive 8.7% in afternoon trading. The gym operator maintained its optimistic full-year guidance targeting system-wide same-store sales growth within the range of 3% to 5%.
Furthermore, it forecasts a significant rise in adjusted income per share, estimating an increase of 7% to 9% over 2023's adjusted EPS of $2.24. Consensus estimates sourced from Capital IQ predict a normalized EPS of $2.43 for this fiscal year. During a recent conference call, Chief Financial Officer Thomas Fitzgerald elaborated on the strategic changes made over the past year, aimed at reducing operational costs associated with owning and operating a Planet Fitness franchise.
These modifications, combined with a recent increase in the classic card price, served to bolster an already appealing return on investment at the store level. "We have made changes over the past year to our underlying business to reduce the cost of owning and operating a Planet Fitness location, as well as our recent classic card price increase, both of which enhanced what were already very attractive store-level returns," Fitzgerald explained to analysts. In second-quarter results, Planet Fitness reported a revenue increase to $300.9 million, compared to $286.5 million from the same period last year, surpassing analysts’ average estimate of $290.7 million.
The adjusted earnings per share also saw an advancement to $0.71 for the three months ending June 30, up from $0.65 in the previous year, outperforming the market expectation of $0.66. The revenue from the franchise segment grew an impressive 9.1% to reach $107.8 million, propelled by a 4.3% uptick in same-store sales.
Revenue generated from corporate-owned locations increased by about 10%, amounting to $125.5 million, while revenue from equipment sales observed a decline of 8.4%. Overall, system-wide same-store sales escalated by 4.2%. Notably, the classic card price increase to $15 took effect on June 28 and did not significantly influence same-store sales during the second quarter, according to Fitzgerald. Chief Executive Colleen Keating conveyed optimistic projections for the future, stating, "We expect that after one year of the price being in effect, existing stores will see a low- to mid-single-digit percentage increase to average unit volumes, with an even greater impact to new stores as the majority of their classic card members will be paying $15." Additionally, she mentioned that the company is in the process of testing a pricing increase for its popular Black Card, which is expected to further enhance store returns. Planet Fitness is actively expanding its international presence and has recently opened its first European club in Spain last month.
This expansion marks the beginning of what the company categorizes as the early stages of growing its international store base. Current stock price stands at $78.08, reflecting a change of +6.07, which translates to a percent change of +8.43. The ongoing positive trajectory is further emphasized by the tag of $PLNT, symbolizing the trust investors place in the company’s vision and strategy..