The Coronavirus Pandemic and a Story Of Survival: How Planet Fitness, Ulta Beauty, And Kohl’s Changed Their Business Models To Successfully Whether The Storm Of The Coronavirus and Surge Forward Towards Profitability.

“If you want to succeed in retail, you need to fully commit to off-price or online,” -Jim Cramer, Mad Money, March 5, 2020

Retailers have been struggling for sometime to compete with the giant Big-box stores such as Amazon (AMZN), Walmart (WMT), Home Depot (HD), and Costco (COST), who offer massive discounts, great selection, and an easy shopping experience. Then the Coronavirus pandemic engulfed America this past March, and most retailers, other than essential ones like pharmacies and grocery stores, were forced to close their doors because consumers were self quarantined. After that took place, retailers needed to make changes to their stores to allow for proper social distancing and hygiene so they could open them safely. Brand loyalty gave way to buying whatever was cheapest. Some retailers, including JC Penney, Neiman Marcus and Brooks Brothers have already succumbed to the virus and have filed for bankruptcy. Others have laid off employees and are looking for potential buyers.

When I looked at the whole retail landscape, I put together some thoughts as to how things were going to play out. One was that no one was going to be working out at fitness clubs for some time; they would be too hard to sanitize and people would find ways to workout at home via a home gym, a DVD, or a YouTube video. Another thought I had was how were department stores going to keep the lights on as so many of them were mall based and everybody was at home and could buy these goods online for less. Finally I believed that beauty supply retailers were going to suffer, because women weren’t leaving their house for socializing or to work, and when they went to essential stores they were wearing masks. Surprisingly to me, I was wrong. Planet Fitness (PLNT), Ulta Beauty(ULTA) and Kohl’s (KSS) all figured out a way to stay relevant and strategically change their business models after taking a massive hit when the pandemic struck. These changes are having a positive impact on how they now do business, and once the pandemic has ended, they will emerge as stronger companies than they were pre-coronavirus. Here are their stories of revival.

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If they can’t come to you, then you go to them.

Planet Fitness has taken a big hit this year due to the pandemic. Their stock is currently at $52. They hit their 10-year high of $88.77 on February 19, 2020 and their 52-week low of $23.77 just under a month later at $23.77 on March 18, 2020. This just shows you where their stock could return to once COVID-19 becomes under control. What sticks out is that not only are Planet Fitness’s earnings expected to grow well annually (38.5% per year), but so are their revenues as well (20.1%). Finally, the company’s earnings have grown by a whopping 43.9% per year over the past five years. Unlike Gold’s Gym, who filed for bankruptcy on May 5, I can’t help myself to see a bright future for Planet Fitness after looking at these numbers once COVID-19 is all behind us. And this is why…

Planet Fitness has rebounded from the pandemic by giving its members a great workout experience in the comfort of their own home. Not only have they allowed members to cancel their memberships for free, but they also have the industry low cost for people who want to become members as well. But for members who wanted to workout while staying at home, and those who preferred doing it after the stay at home orders were lifted, Planet Fitness boasted a vast library of fitness content from company trainers on its app as well as on YouTube. They also offered live streaming classes with instructors on Facebook as well. Stay at home orders led to a 250% spike in app usage for the company, similar to the enhanced user traffic for competitors such as Peloton. The company also put a lot of money into the sanitation and safety of their gyms when they opened, boosting their member’s confidence towards working out in them once they opened. I didn’t take into account when looking at fitness clubs and the virus was how accessible a fitness club would be. Planet Fitness provided a rapid response, and all types of people craved exercise to reduce stress, stay active and feel good.

Also, Planet Fitness only directly owns only 5% of its locations. Franchisees pay for most of the other gyms. So while they have over 2000 locations, CEO Chris Rondeau would like to build out another 2000 long-term. With businesses shutting down and office space opening up, the virus may actually speed up his plan.

Beauty is not what’s on the outside, but what’s on the inside.