|Image Source: AI Imagine|
Planet Fitness shares plunged 15% Friday after the company stunned investors and staff by removing CEO Chris Rondeau. The fitness chain said its board has begun hunting for a new chief executive both internally and externally.
The sudden leadership shakeup shocked employees and Wall Street. Some staffers close to Rondeau only learned the news went public, leaving them blindsided, a source said. The company also canceled investor events, signaling an unplanned move.
“The decision was characterized as the board’s and not Rondeau’s,” analyst Sharon Zackfia wrote. She termed Rondeau’s ouster “abrupt” and unforeseen despite solid earnings.
Planet Fitness tapped current director and franchisee Craig Benson as interim CEO amid the search. But Rondeau offered no explanation for his exit beyond helping “ensure a smooth transition,” while remaining a director and advisor.
“My 30-year career at Planet Fitness has been an incredible ride, and it’s been an honor to lead this Company,” Rondeau said. He rose from a front desk staffer to CEO in 2013 after previous operational roles.
Under Rondeau’s tenure, Planet Fitness expanded from around 700 to 2,400 locations and grew revenue from roughly $200 million to a projected $1 billion this year. He also led the 2015 IPO. But shares have fallen 34% in 2022 despite topping estimates.
“As we enter the next chapter, the Board felt that now was the right time to transition leadership,” Chairman Stephen Spinelli Jr. said, citing “shareholder value” aims.
What’s Next for Planet Fitness After Losing Veteran CEO?
Rondeau’s sudden removal leaves Planet Fitness without the leader who steered its massive growth for the past decade. Selecting the right replacement will be critical for the chain and franchisees.
Some speculate Rondeau clashed with owners over aggressive expansion goals that some reportedly resisted. Franchisees will likely want input on the new CEO pick. Their buy-in on any new strategies will be vital.
Planet Fitness aims to differentiate itself through ultra-low prices and gyms catering to casual exercisers. But rivals like Next Level Fitness now target similar segments. The new CEO may need to refine Planet’s model.
Despite stock slumps, Planet Fitness retains loyal customers as exercise gains popularity. But competitors constantly threaten its budget fitness niche. The next CEO must keep franchisees and members happy while improving financials.
Navigating the transition and shaky economy will test their abilities. But Planet Fitness still has a strong foundation and brand as the hunt for Rondeau’s replacement begins.
Check [opportuneist.com] for the latest updates on leadership changes at Planet Fitness and other major companies. Our experienced business journalists deliver timely analysis of news impacting financial markets and investors.