Gyms struggle to get back to pre-pandemic life
Yahoo Finance’s Brian Sozzi, Julie Hyman, and Myles Udland discuss how the gym industry is faring as the world begins to recover from COVID-19.
Video Transcript
- All right. Welcome back to Yahoo Finance Live on this Monday morning. Well, as life gets back to normal, we are slowly coming perhaps out of some of our pandemic workout routines. But Brian Sozzi, you're looking at some data that suggests the gym business, not really coming all the way back after some initial excitement when we saw reopenings last year.
BRIAN SOZZI: Yeah, this was a story initially-- that we had on the Yahoo.com homepage with the headline, "Gym attendance is not looking too swell right now", and it really isn't, looking at some of the data that I stumbled upon here. First out out of Bank of America, Merrill Lynch. Aggregate spending on gym memberships is now running at 67% of the levels seen in February 2020. And you can see in that chart there, in recent weeks, that gym-- spending on gym membership has, really has leveled out. So we had that initial burst as the COVID restrictions lifted and it has appeared to have been-- it has leveled out. I would suppose because perhaps of fears about people are going back to work of course, but also fears about the new COVID Delta variant too as well.
Also some other data I stumbled across out of Goldman Sachs very at the bottom of a really long note looking at what is working during economic recovery or the opening of the US economy. They're noting that gym attendance is in fact, down. So gym attendance for the week June 14 to June 20th, that's the last time Goldman measured this data, attendance fell 8%. And I went back and looked at what attendance was doing in the four weeks prior. It was declining slightly or up slightly. In the weeks before that, gym attendance was coming on pretty strong.
And so you can see that consumers for whatever reason, might be taking a pause in visiting the gym again. Probably maybe returning to their home base Peloton bikes or treadmills that they were using throughout the pandemic and it's starting to show up in some of the stock prices, guys. Planet Fitness shares is the main primary publicly traded fitness center here in the US. Its stock is down about 14% in the past three months, according to Yahoo Finance Plus data.
Of course, the S&P 500 is up about 7% during that span. Peloton shares, despite all the concern about their treadmills and the safety of treadmills and then potential lawsuits stemming from anything regarding safety there, its stock is only down 3% in the past three months. So I did find it interesting to see that divergence. And it also comes against the backdrop of a lot of fitness chains now starting to offer greater discounts to get people back in the gym.
I look at New York Sports Club. They are now offering five days free. You come in there, sign up, you get five days free. Planet Fitness $1 down and you pay $10 a month. And Retro Fitness, a chain at a couple of locations, a bunch of them by me on Long Island, offering $0.15 down to join. So it's just interesting stuff out there. Perhaps a pause in the gym reopening trade, guys.
- And one more example of that Brian, I'm not sure if you mentioned, was Equinox, that was going to go public through a back deal and reportedly now talks have been called off, so that's just another sign. What I'm curious about as well is the gym versus classes equation. In other words, some of the companies that just run sort of specific classes, specialized classes, I wonder if they're holding up better than the gyms where you just go on your own to work out. If there's an idea that people realized they were craving community, whether that was something they could get online through the likes of a Peloton or in a class.
And I wonder if that's recovering better than this sort of individualized workout. I don't know if there's data on that. I would tend to doubt it, but that will be an interesting thing as well, to see if the sort of paradigm for how people want to work out right now has shifted a little bit more.
BRIAN SOZZI: Yeah, it has been hard for me to tell. I joined a new gym by me and on the weekends usually when the gyms are some of the most crowded, they've been empty during the peak hours. Of course, that's when I tend to go. Peak hours gym, why not here. But the classes are pretty much empty and it's been not what I thought it would have been.
- Yeah. And I think ultimately, like I'm just thinking as we're talking here about what our show is. We talk about markets and investment opportunities and things like that. And the fitness industry has always been faddish, cyclical. Things are really hot, things are not. And so what this data to me is kind of thing is the pandemic may have changed some things, it may not have changed everything and I think a cyclically challenged business like the big box gym, remains challenged after COVID. But of course, Peloton then had a bunch of growth pulled forward. So maybe it's also challenged after COVID.
And it just becomes a very challenging investment case for any of these ideas. Equinox, Orangetheory, like a whatever-- SLT, not that that's all that big, but you know what I'm saying. Like any of these opportunities is just difficult for an investment case that's going to last five or 10 years because that's just not really the shape that the fitness industry tends to take over time. And so I think that really has always been the challenge here and it's likely to remain so going forward. All right.
