Will Kohl’s deal with Planet Fitness make its rivals sweat?
Yesterday’s announcement that Kohl’s has agreed to lease space next to 10 of its stores to Planet Fitness doesn’t require a lot of mental gymnastics to understand.
- Kohl’s has been on more than a year-long mission to find complementary businesses (see Aldi) interested in leasing space adjacent to hundreds of stores that it has recently right-sized.
- The retailer has been aggressively pursuing a health and wellness angle in recent years as it looks to drive sales of activewear, fitness tech, etc. In January, Kohl’s announced a pilot collaboration with WW, the new Weight Watchers, including a studio inside one of its stores, the launch of WW Healthy Kitchen products and subsidized memberships for employees joining the WW Freestyle program.
- Planet Fitness has found success locating its gyms in shopping centers and is looking to grow its presence in markets around the U.S. The new facilities next to Kohl’s will measure between 20,000 and 25,000-square-feet.
“We see the Planet Fitness partnership as a real win-win, and in fact the teams are working to take advantage of the co-location in these first 10 stores to figure how we can co-market to these customers,” said Michelle Gass, Kohl’s CEO, on the retailer’s fourth quarter earnings call yesterday.
“I think like everything, we have to build a few,” said Ms. Gass. “We will learn and we will take it from there, but all our indications [are] this is going to be a great fit for us and for our customers.”
The Planet Fitness deal news came on the same day that Kohl’s reported its fourth quarter results. The retailer saw its share price rise 7.31 percent in trading yesterday after it announced that increased foot traffic to its stores helped it achieve a one percent increase in same-store sales, exceeding the 0.3 percent gain expected by Wall Street, as per CNBC. Adjusted earnings per share came in at $2.24, beating the consensus of $2.18.
- Planet Fitness Announces Development Partnership With Kohl’s – Planet Fitness/PRNewswire
- Kohl’s Corporation CEO Michelle Gass on Q4 2018 Results (Earnings Call Transcript) – SeekingAlpha
- Kohl’s shares jump on better-than-expected profit and sales during crucial holiday shopping season – CNBC
- Kohl’s continues wellness push with WW collaboration – RetailWire
- Kohl’s Commitment to Health and Wellness – Kohl’s
DISCUSSION QUESTIONS: Do you see the Planet Fitness deal as a winning partnership for Kohl’s? How likely are other big box retailers to follow a similar strategy of right-sizing stores and looking for complementary businesses to fill the space?