Last year, the fitness equipment specialist Peloton was one of the winners of the corona pandemic. On Thursday, the New York company cut its sales forecast for the current fiscal year by up to a billion dollars. Instead of $ 5.4 billion – as it was three months ago – Peloton now only expects revenues of $ 4.4 billion to $ 4.8 billion. Investors then let the stock plummet by more than 32 percent in pre-trading on Friday.
For Peloton, it turned out to be a stroke of luck in 2020 that the fitness studios had closed, but the urge to move among the involuntary couch potatoes remained unbroken. The high price of the networked training bikes, which is already over 1000 euros for the entry-level model, could not deter many fitness enthusiasts from buying. In order to also pick up joggers within their own four walls, Peloton also launched a treadmill that was also not exactly affordable last year. The fact that 70 people injured themselves while using it and a six-year-old child was pulled under the tape and died, resulted in a large-scale recall campaign. But even this incident could only stop the company for a short time.
Peloton can only continue to record an increase in sales thanks to the subscription revenues
The situation was different with the lifting of the corona restrictions, which noticeably slowed peloton. In the meantime, the company has also corrected its forecast of the number of subscribers significantly downwards. 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 3.63 million as before. Peloton explained that, among other things, with Apple’s new rules for more privacy on the iPhone. This would have made it more difficult to attract new subscribers to the app. Nevertheless, it was the subscription revenues that had almost doubled to $ 304 million and which Peloton owed to be able to present an increase in sales at all. The business with the sale of fitness equipment shrank by 17 percent to 501 million dollars.
This was also due to the fact that Peloton had reduced the price of its base model by a fifth in August. After that, customers increasingly preferred it to the more expensive and lucrative new device. Before the price cut, both models had sold about equally well. After Peloton cut $ 400 off the price of the older version, the base model now accounts for three quarters of bike sales, according to a conference call.
Meanwhile, company boss John Foley reacted calmly to the changed sales forecast. On Twitter, he shared a video from Peloton’s Christmas campaign, for which US comedian Brett Gelman slips into the role of Charles Dickens’ invented Ebenezer Scrooge. In this case, the curmudgeon does not want to become a better person, but above all a fitter person with the help of the in-house equipment. In order to recover from the sharp price slump, Peloton will probably need more than a tired laugh during the Christmas business.