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Planet Fitness CEO flexes on 0 gym closures as pandemic battered industry

It has been a long and winding road during the pandemic for gym chain giant Planet Fitness, and its efforts to get through to the other side of the health mess shows.

“I am extremely happy to say we lost no gyms in the pandemic. The industry lost 22% of the gyms open, closed permanently. We lost none,” Planet Fitness CEO Chris Rondeau said on Yahoo Finance Live. 

Planet Fitness currently operates 2,254 locations in the District of Columbia, Puerto Rico, Canada, Panama, Mexico and Australia. 

The same resilience can’t be said for the likes of 24 Hour Fitness and New York Sports club owner Town Sports, which were forced to file for bankruptcy. Many smaller boutique gyms — all the rage pre-pandemic — have been forced to downsize or have vanished.

Rondeau is now stepping on the gas to plot Planet Fitness’ post-pandemic life. 

The company said this week it will spend $800 million to acquire its largest franchisee Sunshine Fitness. Sunshine will add more than 100 company-operated locations to the Planet Fitness portfolio, mostly in the South. 

A customer wears a face mask as they lift weights while working out inside a Planet Fitness Inc. gym as the location reopens after being closed due to the Covid-19 pandemic, on March 16, 2021 in Inglewood, California. – Los Angeles County is allowing fitness centers and gyms to reopen for indoor workouts at ten percent capacity with customers wearing face masks under Covid-19 public health guidelines. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)

After the deal closes in the first quarter, Planet Fitness expects that 10% of its locations will be company-operated rather than francisee-led. 

“Those franchisees have been some of our best-performing in the system,” Rondeau said of the Sunshine deal. 

By and large, the deal reinforced what continues to mostly be a bull case for Planet Fitness shares on Wall Street.

“We believe investors should appreciate that Planet Fitness has 1) a capital-light, low-risk, defensible model with attractive pricing, 2) a large and growing unit presence, 3) an advertising flywheel and expanding affinity network, and 4) enhanced digital strategies that reduce friction,” said Jefferies analyst Randal Konik. 

Konik rates Planet Fitness shares at Buy.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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