Planet Fitness is increasing prices while cautioning customers about their cost-consciousness.

• Since 1998, Planet Fitness has not increased its base-level membership prices for new customers, but now the gym operator is raising them, despite warning that customers are becoming more cost-conscious.
• The company reported weaker-than-expected first-quarter revenue and cut guidance for the fiscal year.
• Craig Benson, the interim CEO, stated that multiple macroeconomic factors influenced a growing price-conscious consumer.

The gym operator has increased its base-level membership prices for new customers for the first time since 1998, despite warning that customers are becoming more cost-conscious.

New members will pay $15 per month for classic card membership this summer, while current members will continue to pay $10 per month "for the duration of their membership," Planet Fitness announced Thursday in its quarterly earnings report.

Tom Fitzgerald, the company's outgoing chief financial officer, stated that it will take some time for the benefit of the price change to expand our store level margins as the price increase will only be on new classic card membership.

Planet Fitness announced that it will start testing higher prices for its Black Card membership this summer, which offers customers access to any Planet Fitness location, digital content, and other benefits for a starting price of $24.99 per month. The change comes after months of price testing in several markets countrywide.

Although the company reported weaker-than-expected first-quarter revenue and cut guidance for the fiscal year, it decided to raise prices, unlike its competitor which posted better-than-expected results and strong membership growth for its most recent quarter.

Gymgoers who are older and more affluent tend to be members of Life Time, while Planet Fitness attracts a younger, budget-conscious audience.

In the company's earnings release, Craig Benson, the interim CEO, stated that several macroeconomic factors impacted a more cost-conscious consumer.

Benson stated that our results were affected by several challenges, including a change in consumer priorities towards savings and concerns about the rise in Covid infections and other illnesses in the New Year.

The company's national advertising campaign did not connect with consumers as widely as expected, as stated by him.

Despite the warning, analysts still see positive catalysts ahead for the company.

"Although the guidance was reduced, the results were not as weak as anticipated, according to Piper Sandler analyst Korinne Wolfmeyer. Additionally, two critical changes have been implemented to revitalize shares, including the appointment of a new CEO and the introduction of White Card pricing."

Planet Fitness stock has a "buy" rating from Piper Sandler, with a price target of $80. The stock is currently trading at around $68, having increased by about 9% on Thursday.

Planet Fitness' incoming CEO, Colleen Keating, is expected to lead the company to a successful turnaround, according to The Street.

Wolfmeyer stated that the CEO's past experience in brand building and leading consumer-facing companies is crucial to the current situation.