New Haven Register (New Haven, CT)
Peloton closes stores in 2 Connecticut locations
Peloton reported Wednesday another quarterly nine-figure loss. The deficit of about $335 million helps explain why the high-end exercise equipment maker no longer has a brickand-mortar presence in Connecticut.
The company recently closed its stores in downtown Westport and at the Westfarms mall on the Farmington-West Hartford border. Those exits reflect the restructuring of a business that boomed during the early days of the COVID-19 pandemic, but one that has recently navigated a difficult transition, which has entailed thousands of job cuts and numerous store closings.
“Over the past year, the focus has been on re-setting the balance sheet to ensure that, for our current members and prospective members, the company was solid, sustainable and growing,” Ben Boyd, senior vice president of global communications at Peloton, said in an interview. “We certainly maintain our commitment to members in Connecticut and all other 49 states. It’s just a question of doing that in a cost-efficient, costeffective way.”
Peloton’s “micro” store at Westfarms closed on Dec. 31, among 16 showroom closings nationwide, according to Amanda Sirica, a spokesperson for Westfarms. It had operated at the mall since 2018.
“On the heels of a successful holiday season, Westfarms continues to see shopper momentum this year,” Sirica said in a written statement. “Over the past six months, we have welcomed six new retailers to our merchandising mix and are currently under construction with several additional stores, including Arhaus and Jordan’s Furniture. The center continues to be a sought-after retail destination by both consumers and merchants.”
The ownership of 58 Main St., the property that had housed the Westport store, could not be immediately reached for comment.
Peloton officials were not able to immediately confirm the closing date of the Westport establishment, which opened in 2018.
Today, the nearest Peloton store to Connecticut is at The Westchester mall in White Plains, N.Y.
Manhattan-headquartered Peloton’s sales exploded during the first year of the pandemic, as its bikes and treadmills became a popular alternative to temporarily closed gyms for customers, who pay membership fees to participate in its livestreamed and on-demand classes.
But sales slowed in 2021 as the rollout of COVID-19 vaccines encouraged many people to return to gyms.
In 2022, the company implemented a restructuring plan, which included a drastic reduction in employee head count. The total has dropped in the past year from about 9,000 people to nearly 4,000. The company declined to comment on whether the Westfarms and Westport stores’ employees were laid off or offered other positions in the company.
“We saw a significant reduction in head count in the past year, and savings commensurate with that,” Chief Executive Officer and President Barry McCarthy said during an earnings call Wednesday. “Will we see more of that on a go-forward basis? No, we won’t. I’ve made it clear on a previous call that, as far as I’m concerned, we’re done with head count reductions.”
Also last year, Peloton launched third-party sales through Amazon and Dick’s Sporting Goods, while it outsourced last-mile deliveries and manufacturing of “connected fitness units.”
For the quarter ending Dec. 31, Peloton recorded about $793 million in revenues, down 30 percent year over year. For the third-straight quarter, it generated more revenue from subscriptions than it did from hardware sales. Its loss of about $335 million compared with a loss of around $439 million a year ago.
The company finished 2022 with about 6.7 million members, flat compared with the total at the end of 2021.
“We outperformed in the quarter,” said McCarthy, the former chief financial officer of Spotify, who succeeded Peloton co-founder John Foley as CEO in February 2022. “The good news is that we outperformed. The bad news is… our ability to forecast the business, particularly the many changes we made to the business model, is not as highly evolved yet as it will be.”
Investors were encouraged by the results, as Peloton’s shares surged Wednesday by more than 26 percent, to finish the day at about $16. The company’s stock has reached a 52week high of about $40 and fallen to a 52-week low of about $7.
Among other recent developments, Peloton agreed last month to pay a civil penalty of about $19 million to resolve charges by the U.S. Consumer Product Safety Commission that it failed to immediately report a treadmill defect. The flaw was involved in one death and a number of injuries, according to the CPSC. In May 2021, Peloton and the CPSC announced a recall of the Tread+ treadmill.