Peloton shares tumble as it warns of sales decline
Shares in Peloton tumbled by almost a quarter on Thursday after the embattled fitness group cut back its sales forecast amid lackluster demand for its high-end equipment.
The company, which rode the athome exercise boom at the height of the Covid-19 pandemic, has suffered as many of its users headed back to gyms across the world.
While its connected fitness workout service finished the last quarter with 3 million subscribers, sales of its hardware, like stationary bikes and treadmills “were a bit softer than we expected”, the chief financial officer, Elizabeth Coddington, conceded during a call with analysts.
Peloton braced investors for its revenue to fall by about 5% during the current quarter, which runs to March, to as low as $700m. It also estimated that adjusted losses would widen, from $18.7m to as much as $30m.
The group also downgraded guidance for revenue during its current financial year, which runs until June, from between $2.7bn and $2.8bn to between $2.68bn and $2.75bn.
Wall Street has grown impatient waiting for Peloton’s recovery. Its shares dropped 22.9% to $4.29 during early trading in New York on Thursday.
Once valued at almost $50bn on the stock market, its current valuation is $1.5bn.
“Our guidance for the remainder of FY24 represents our current best thinking about the future performance for the business,” Barry McCarthy, Peloton’s CEO and president, told investors in a letter. “But I’ll be disappointed if we can’t figure out how to improve our performance during the quarter, like we did in” the most recent quarter, the letter said.
“While we continue to outperform the connected fitness market, our biggest challenge continues to be growth, at scale.”
Sales at the firm fell 6% to $743.6m in the three months to December. Net losses narrowed from $335m to $195m.
Peloton’s member support customer service unit has failed to per
form as well as it had hoped, according to McCarthy. “This past holiday season was particularly taxing for members,” he said. “The Member Support experience has tarnished our brand, and we simply must do better. The team is currently in the middle of a reboot. New leadership. New systems. New thirdparty vendors. New training. New staff.”
But McCarthy, a former top executive at Spotify and Netflix, said partnerships with retailers including Amazon had prompted “exceptionally strong sales growth” over the holiday trading period.
Peloton has also been “encouraged”, he said, by demand for its Tread+ treadmill, two years after sales were temporarily halted due to safety concerns.