During the summer, Planet Fitness (US:PLNT) released a promotional video jokingly comparing a 75-pound (lb) dumbbell from one of its gyms with a 75lb weight from a fancier operator. The point being: why pay more? The ad was released after the $8.6bn (£6.8bn) gym giant raised prices, a move that alongside a share buyback programme announced earlier in the month and stronger Q3 earnings lifted its share price to an all-time high.
The industry’s momentum both in Planet Fitness’s home US market and the UK, where budget operator Gym Group’s (GYM) shares are up almost 60 per cent this year, comes despite a new survey showing most gym-goers are trying to cut back spending. Private-equity-owned Pure Gym said last week almost 50 per cent of the respondents to a survey say ”they've decreased their spending on exercise because they can no longer afford it”.
At the same time, even budget chains such as Planet Fitness and Gym Group are putting prices up. This is both to help cover costs and contribute to higher growth spending. There is some nuance to the price rises, however, which also helps explain why investors have backed the shares so heavily this year.