With the lifting of corona restrictions, interest in the company’s devices decreased again.
(Photo: AP)
new York The sporting goods specialist Peloton closed the past quarter in the middle of a large-scale restructuring with a loss in the billions. The bottom line is a shortfall of a good $1.24 billion (1.24 billion euros), after being in the red from $313 million a year earlier. Sales fell in the fourth business quarter, which ended in June, by more than 28 percent to just under $679 million, as the New York company announced on Thursday.
Peloton had benefited greatly from gym closures early in the pandemic. Sales of the New York-based company’s training bikes and treadmills soared, and some interested parties had to wait a long time for their equipment. However, Peloton did not interpret the boost as a special 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.
That turned out to be a serious miscalculation: With the lifting of corona restrictions, interest in the company’s devices decreased again, Peloton was sitting on high inventories, and construction of the factory in the USA was canceled again. In July, Peloton then decided to outsource the device production entirely to a contract manufacturer. About a third of the operating loss of 1.2 billion dollars is due to the conversion measures, wrote company boss Barry McCarthy.
The former CFO of Spotify and Netflix admitted in the 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.”
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McCarthy also gave the shareholders 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 save two men in the water. “Peloton is like this cargo ship.” The alarm had been sounded and everyone was at their posts. Investors dropped the stock more than 15 percent in premarket trading.
More: Peloton wants to boost business again through sales on Amazon