Planet Fitness, a popular gym chain, has unexpectedly removed its longtime CEO, Chris Rondeau, causing shares to plummet by nearly 16%. Rondeau has served as CEO since 2013 and played a crucial role in the company’s growth, leading its IPO and tripling the number of club locations during his tenure. The decision to remove him comes as a surprise, especially following a stronger-than-expected second-quarter earnings report last month.
The reason for Rondeau’s departure remains unclear, and it’s not apparent what triggered the decision. Some employees close to Rondeau learned about his departure at the same time as the public announcement, leaving them shocked.
Planet Fitness has announced a search for its next CEO, considering both internal and external candidates. In the meantime, Craig Benson, a former governor of New Hampshire and a member of the company’s board, will serve as interim CEO. Rondeau will continue as a member of the board and will provide advisory support for a smooth transition.
While the company has reported strong sales and profit growth, investors have raised concerns about its equipment and franchise placement plans, which are significant revenue drivers. In August, Rondeau announced a scaled-back outlook for equipment placement in new franchisee stores for 2023, citing higher construction costs and increased interest rates.
The company’s stock performance has been impacted by uncertainties surrounding its growth rate and challenges in securing new leases. Planet Fitness stock has declined by about 36% this year, with a market value of approximately $4.4 billion.
The sudden leadership change raises questions about the company’s future strategy and its ability to address industry challenges in the fitness and gym market.