Planet Fitness shares sink 15% after board ousts CEO in shocking move

Chris Rondeau, CEO of Planet Fitness

Adam Jeffery | CNBC

In a move that surprised traders and workers alike, Planet Fitness ousted firm veteran Chris Rondeau from his submit as CEO, the exercise chain mentioned Friday in a press release.

The inventory dropped 15% in the wake of the announcement, hitting a 52 week low.

Planet Fitness mentioned it’s looking for its subsequent chief each internally and externally. Craig Benson, the previous governor of New Hampshire and a member of the corporate’s board, will function the interim CEO. He’s a franchisee of each Planet Fitness and Dunkin’ Donuts and has been on Planet’s board for six years.

Rondeau’s departure seems sudden, and it isn’t clear what triggered the choice, particularly after a stronger-than-expected second quarter earnings report final month. Some employees near Rondeau realized about his departure across the time the information was introduced publicly, leaving them shocked, in keeping with an individual aware of the matter.

In a analysis observe, William Blair analyst Sharon Zackfia referred to as the information “abrupt” and mentioned it did not “seem deliberate” as a result of the corporate canceled two deliberate investor convention shows this week.

“The determination was characterised because the board’s and never Rondeau’s,” Zackfia wrote.

Planet Fitness declined additional remark. Rondeau could not be reached.

Rondeau is a longtime veteran of the corporate, working his method up from a entrance desk place practically 30 years in the past on the fitness center’s first location in Dover, New Hampshire, when it was owned by founders Michael and Marc Grondahl. Rondeau has served as CEO since 2013 and beforehand held the position of chief working officer. He will proceed as a member as of the board of administrators and can keep on in an advisory position “to assist guarantee a easy transition,” the corporate mentioned.

“My 30-year profession at Planet Fitness has been an unbelievable trip, and it has been an honor to guide this Company and serve our workers, franchisees and members, all of whom have performed a key position in our super progress and success,” Rondeau mentioned in an announcement. “I’m grateful for and sit up for supporting the administration workforce in an advisory capability, and have faith in the long-term potential of Planet Fitness.”

During his time as CEO, Rondeau led Planet Fitness’s IPO and tripled its membership base from about 700 to about 2,400 areas. When he began in the place, the corporate was doing about $200 million in annual income and is now projected to do greater than $1 billion this 12 months, Zackfia mentioned.

“As we enter the following chapter of Planet Fitness’ journey, the Board felt that now was the proper time to transition management,” Planet Fitness Chairman Stephen Spinelli Jr. mentioned in a press launch. “In at the moment’s evolving setting, Planet Fitness is continuous to boost our aggressive benefit, capitalize on our measurement and scale, and drive additional shareholder worth.”

The firm’s inventory is down about 34% this 12 months, giving it a market worth of about $4.47 billion.

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