With the lifting of corona restrictions, interest in the company’s devices decreased again.
(Photo: AP)
Dusseldorf The sporting goods specialist Peloton closed the past quarter with a loss in the billions. The bottom line was a deficit of a good 1.24 billion dollars (1.24 billion euros). A year earlier, the loss had been $313 million.
Sales fell in the fourth business quarter, which ended in June, by more than 28 percent to almost $679 million, as the New York company announced on Thursday.
Peloton is currently in the midst of a major rebuild. At the beginning of the pandemic, the manufacturer had benefited greatly from the closure of gyms. Sales of exercise bikes and treadmills for use at home increased – some interested parties had to wait a long time for their devices.
However, Peloton did not interpret the boost as a boom, but as the beginning of a growth era and invested in the expansion of capacities up to the construction of a factory in the USA.
Top jobs of the day
Find the best jobs now and
be notified by email.
This turned out to be a serious miscalculation: With the lifting of corona restrictions, interest in the company’s fitness equipment declined again – Peloton was sitting on high inventories, and construction of the factory in the USA was even stopped again. In July, the company then decided to completely outsource device production to a contract manufacturer.
A third of the loss is due to conversion work
Around a third of the operating loss of $1.24 billion was due to the restructuring measures, wrote company boss Barry McCarthy. The former chief financial officer of Spotify and Netflix admitted in a letter to shareholders that the numbers could be interpreted as threatening if the attitude was negative. “But what I’m seeing is significant progression in our comeback and in Peloton’s long-term resilience.”
McCarthy even shared an anecdote from his youth when he worked on a cargo ship. One night he was woken up by an alarm and saw the captain turn the huge ship sharply to rescue two men from the water. “Peloton is like this cargo ship,” writes McCarthy. The alarm went off and everyone was at their posts.
McCarthy only replaced co-founder and CEO John Foley in February. With his resignation, Foley gave in to pressure from investors, who were particularly worried about the financial situation.
The Peloton CEO reiterated that he sees Peloton’s future less in equipment sales and more in the training courses and software business. He would be “thrilled” if someone used the Peloton app with fitness equipment from other manufacturers, he said in a conference call with analysts. Content is the “crown jewel” of the company.
The current challenge is to develop customer groups that Peloton has not yet reached. Currently, 96 percent of the Peloton technology in households are fitness bikes. McCarthy’s plans include having buyers assemble Peloton’s devices themselves rather than having the company do it for them.
Cooperation with Amazon
Peloton announced on Wednesday that it intends to sell the fitness equipment in the USA via the online retailer Amazon. Until now, Peloton has relied on exclusive sales via its own websites and showrooms. The partnership with Amazon should get sales going again – the stock initially reacted positively.
In a first reaction on Thursday, however, investors temporarily dropped the share by more than 18 percent in US trading.
With agency material.
More: Peloton wants to boost business again through sales on Amazon