In a move that stunned investors and employees alike, Planet Fitness ousted company veteran Chris Rondeau from his post as CEO, the workout chain said Friday in a press release.
The stock dropped 15% in the wake of the announcement, hitting a 52 week low.
Planet Fitness said it is searching for its next chief both internally and externally. Craig Benson, the former governor of New Hampshire and a member of the company’s board, will serve as the interim CEO. He’s a franchisee of both Planet Fitness and Dunkin’ Donuts and has been on Planet’s board for six years.
Rondeau’s departure appears sudden, and it’s not clear what triggered the decision, especially after a stronger-than-expected second quarter earnings report last month. Some staff close to Rondeau learned about his departure around the time the news was announced publicly, leaving them shocked, according to a person familiar with the matter.
In a research note, William Blair analyst Sharon Zackfia called the news “abrupt” and said it didn’t “appear planned” because the company canceled two planned investor conference presentations this week.
“The decision was characterized as the board’s and not Rondeau’s,” Zackfia wrote.
Planet Fitness declined further comment. Rondeau couldn’t be reached.
Rondeau is a longtime veteran of the company, working his way up from a front desk position nearly 30 years ago at the gym’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 previously held the role of chief operating officer. He will continue as a member as of the board of directors and will stay on in an advisory role “to help ensure a smooth transition,” the company said.
“My 30-year career at Planet Fitness has been an incredible ride, and it’s been an honor to lead this Company and serve our employees, franchisees and members, all of whom have played a key role in our tremendous growth and success,” Rondeau said in a statement. “I am grateful for and look forward to supporting the management team in an advisory capacity, and have confidence in the long-term potential of Planet Fitness.”
During his time as CEO, Rondeau led Planet Fitness’s IPO and tripled its club base from about 700 to about 2,400 locations. When he started in the position, the company was doing about $200 million in annual revenue and is now projected to do more than $1 billion this year, Zackfia said.
“As we enter the next chapter of Planet Fitness’ journey, the Board felt that now was the right time to transition leadership,” Planet Fitness Chairman Stephen Spinelli Jr. said in a press release. “In today’s evolving environment, Planet Fitness is continuing to enhance our competitive advantage, capitalize on our size and scale, and drive further shareholder value.”
The company’s stock is down about 34% this year, giving it a market value of about $4.47 billion.