Fitness equipment specialist
Peloton cuts annual targets
The Peloton logo adorns the frame of a stationary bike. Photo: Mark Lennihan / AP / dpa
© dpa-infocom GmbH
A year ago, the Peloton training bikes were a great success story of the Corona crisis. But now it is difficult for the peloton to keep up the pace. Investors are on the run.
The corona boom is finally over for the fitness equipment specialist Peloton. The New York company cut its sales forecast for the current fiscal year by up to a billion dollars.
Investors reacted in shock and let the stock plummet by more than 32 percent in pre-trading on Friday.
Peloton now expects revenues between $ 4.4 billion and $ 4.8 billion. It is a striking reassessment: three months ago the company had assumed a figure of 5.4 billion.
Peloton was one of the great success stories in 2020. While gyms stayed closed, many bought the multi-thousand dollar networked exercise bikes. Even a recall campaign for the peloton treadmills seemed to have quickly digested the company.
But with the lifting of the corona restrictions, business is more difficult. Peloton also significantly lowered the forecast of the number of subscribers. At the end of the current financial year in mid-2022, the company now expects 3.35 to 3.45 million subscription customers – instead of the previous expectation of up to 3.63 million. Peloton explained, among other things, that Apple’s new rules for more privacy on the iPhone have made it more difficult to attract new subscribers to the app.
At the same time, subscription revenues, which rose by 94 percent to a good 304 million dollars, were the only reason why Peloton was able to present an increase in sales at all recently. The fitness equipment sales business shrank 17 percent to $ 501 million.
This was also because Peloton cut the price of the original model of its training bike by a fifth in August. After that, customers increasingly preferred it to the more expensive and lucrative new device. Before the price cut, the two models had sold about equally well. After Peloton cut $ 400 off the price of the older version, it now accounts for three-quarters of bike sales, according to a conference call.
Peloton’s devices are also being used somewhat less with the opening steps in the pandemic. Subscription customers received an average of 16.6 trainings per month in the past quarter – after 20.7 a year earlier.
Overall, sales in the first quarter of fiscal year ended September rose six percent year-on-year to $ 805.2 million. The bottom line is that Peloton made a loss of $ 376 million from a loss of $ 69.3 million a year earlier. Among other things, higher logistics costs also weigh on the result. “We are making the necessary adjustments to stay on the path to black numbers, and the long-term assessment of our prospects remains unchanged,” assured company boss John Foley. The share then slipped even more into the red.