Yet another CEO turnover.
On Friday, Planet Fitness (PLNT)’s board of directors announced a decision to “transition to new leadership,” resulting in the departure of 30-year company veteran and CEO Chris Rondeau.
“As we enter the next chapter of Planet Fitness’ journey, the Board felt the time was right to transition to leadership,” Stephen Spinelli, Jr., chairman of the board, said in the release.
As the company searches for new leadership, six-year board member Craig Benson has been named interim CEO, effective immediately. Benson previously served as governor of New Hampshire and is a franchisee of both Planet Fitness and Dunkin’ Donuts. The company said it is evaluating both internal and external candidates.
Planet Fitness is the latest company to shake up its executives, and it’s something Wall Street isn’t taking lightly. Planet Fitness shares fell as much as 16% on Friday, hitting a 52-week low. The stock was also a trending ticker on Yahoo Finance.
Planet Fitness declined to respond to Yahoo Finance’s request for comment.
While no exact reason was given for Rondeau’s immediate departure, during his 10-year tenure, Rondeau was credited with increasing the fitness center’s membership by more than five and a half times to 18.4 million members and quadruple its footprint to more than 2,400 stores.
It also nearly quintupled revenue to more than $1 billion this year, up from $200 million in 2013, and took the company public in 2015, William Blair analyst Sharon Zackfia said in a note. Since the company’s IPO, shares have more than tripled.
In the release, Rondeau called his career at Planet Fitness “an incredible journey,” thanking employees, affiliates and members. He will continue to serve on the board of directors and will be nominated for re-election at the company’s 2024 annual meeting.
Wall Street stunned by Rondeau’s departure
The sudden change in leadership appears to have taken Wall Street by surprise.
“The catalyst for the leadership change is uncertain,” said Zackfia, an analyst at William Blair. “It is also a sudden decision and does not appear to be planned, as the company canceled two investor conference presentations scheduled this week and the decision was characterized as that of the board and not Rondeau.”
As for who the board might choose as the next CEO, that’s also unclear.
“We know of no heir apparent internally and suspect that the board will instead seek an external candidate with strong franchising experience (we do not consider fitness club experience necessary given Planet’s unique go-to-market strategy compared to Group of equals),” Zackfia added.
This also raises questions about the company’s future strategy, Cowen analyst Max Rakhlenko wrote in a note on Friday.
“The shakeup increases uncertainty as Mr. Rondeau has been at PLNT for 30 years, including 10 as CEO,” Rakhlenko wrote. “Board member Craig Benson has been named interim CEO and his experience as a PLNT affiliate positions the company well during the search. That said, PLNT is going through a challenging period and this period will delay the implementation of the new strategy .”
However, Zackfia said the change could unlock better returns for the company – something Stifel analyst Chris O’Cull echoed in a new note.
“While the timing of the announcement was surprising, we believe the leadership transition could set the stage for a faster pace of change, with some elements of the model – such as increasing the price of the Classic subscription package – potentially now on the table table for consideration,” O’Cull said.
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Brooke DiPalma is a reporter for Yahoo Finance. Follow her on Twitter at @Brooke Di Palma or email her at bdipalma@yahoofinance.com.
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