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FreeMotion Fitness
FreeMotion Fitness
FreeMotion Fitness
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UNITING THE WORLD OF FITNESS
Health Club Management

Health Club Management

News

Peloton hits its first big hurdle as the company grapples with growing pains

Shares in Peloton have fallen after the company revealed it was cutting the price of its original Bike to US$1,495
Results for Q4 saw a loss of US$313.2m against profits of US$89.1m last year
Peloton also predicts its expenses will increase during 2022, impacting margins
The company recalled its treadmill recently in the US, following the death of a child

Shares in Peloton have fallen after the company revealed fourth-quarter losses. It also said that tactical changes to the business will hit profits until 2023.

Fourth-quarter results saw the company reporting losses of US$313.2m against profits of US$89.1m a year ago in spite of revenues having increased 54 per cent to US$936.9m.

Peloton is lowering the price of its original Peloton Bike across all markets to US$1,495 (€1,495, £1,350 GBP) – it's also introducing a longer, 43-month, 0 per cent financing term option for Bike+ and Tread across all regions.

In its financial update to investors, Peloton said: "In the near term, our profitability will be impacted by the price decrease in our original Bike, significant increases in commodity costs and freight rate increases, a sales-mix shift to Tread, investments in marketing to broaden our appeal, accelerated investments in new products and features, investments to scale our member support and logistics operations, and significant investments in systems to support our growth.

"Looking ahead, we expect to return to Adjusted EBITDA profitability for full year 2023.

"Connected Fitness Margin in Q1 will also be significantly impacted by last-mile delivery costs, given the seasonality in our business.

"Peloton’s last-mile logistics is an important aspect of our member experience, but the fixed investments in warehouses, vehicles and people in our delivery network are carried throughout the year.

"Therefore, we will experience fixed-cost inefficiencies during our smaller volume first quarter, but expect significant leverage of these expenses in the remaining quarters of FY 2022."

Following the announcement, shares in Peloton fell by 15 per cent (to US$97), before recovering to around US$107 at the close of markets.

Peloton was one of the big "winners" of the pandemic, as people flocked to connected and digital fitness products and services as health clubs and studios were forced to close their doors.

Sales of Peloton products surged during 2020 and into 2021, more than doubling to US$4bn in the year to 30 June 2021, however, it recalled its treadmills in the US, following the death of a child, resulting in a significant financial and reputational hit.

To read Peloton's letter to investors in full, click here.

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
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News

Peloton hits its first big hurdle as the company grapples with growing pains

Shares in Peloton have fallen after the company revealed it was cutting the price of its original Bike to US$1,495
Results for Q4 saw a loss of US$313.2m against profits of US$89.1m last year
Peloton also predicts its expenses will increase during 2022, impacting margins
The company recalled its treadmill recently in the US, following the death of a child

Shares in Peloton have fallen after the company revealed fourth-quarter losses. It also said that tactical changes to the business will hit profits until 2023.

Fourth-quarter results saw the company reporting losses of US$313.2m against profits of US$89.1m a year ago in spite of revenues having increased 54 per cent to US$936.9m.

Peloton is lowering the price of its original Peloton Bike across all markets to US$1,495 (€1,495, £1,350 GBP) – it's also introducing a longer, 43-month, 0 per cent financing term option for Bike+ and Tread across all regions.

In its financial update to investors, Peloton said: "In the near term, our profitability will be impacted by the price decrease in our original Bike, significant increases in commodity costs and freight rate increases, a sales-mix shift to Tread, investments in marketing to broaden our appeal, accelerated investments in new products and features, investments to scale our member support and logistics operations, and significant investments in systems to support our growth.

"Looking ahead, we expect to return to Adjusted EBITDA profitability for full year 2023.

"Connected Fitness Margin in Q1 will also be significantly impacted by last-mile delivery costs, given the seasonality in our business.

"Peloton’s last-mile logistics is an important aspect of our member experience, but the fixed investments in warehouses, vehicles and people in our delivery network are carried throughout the year.

"Therefore, we will experience fixed-cost inefficiencies during our smaller volume first quarter, but expect significant leverage of these expenses in the remaining quarters of FY 2022."

Following the announcement, shares in Peloton fell by 15 per cent (to US$97), before recovering to around US$107 at the close of markets.

Peloton was one of the big "winners" of the pandemic, as people flocked to connected and digital fitness products and services as health clubs and studios were forced to close their doors.

Sales of Peloton products surged during 2020 and into 2021, more than doubling to US$4bn in the year to 30 June 2021, however, it recalled its treadmills in the US, following the death of a child, resulting in a significant financial and reputational hit.

To read Peloton's letter to investors in full, click here.

Sign up here to get HCM's weekly ezine and every issue of HCM magazine free on digital.
Related news

Is Peloton planning to launch a heart rate tracker?

08 Jul 2021
Peloton is rumoured to be expanding its at-home fitness accessories with the launch of a ...

Peloton launches Corporate Wellness platform

22 Jun 2021
Peloton is expanding its reach within the online fitness market with the launch of a ...

Peloton agrees deal with consumer safety agency for recall of treadmills following death of child

05 May 2021
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FIBO Exhibition
FIBO Exhibition
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HCM Magazine
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HCM Magazine
Supplier launch
Life Fitness introduces Integrity SL, the next-generation LED console with intuitive functionality and digital connectivity
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Active IQ is launching courses to upskill fitness professionals to work in social prescribing, extending the reach of the industry
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The appetite for health clubs is strong among consumers and investors – to take advantage of this, operators must figure out how to meet key challenges in operationally sustainable ways
HCM Magazine
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Booming membership sales, busy suburban clubs and members visiting during the working day. Operators are reporting it’s good to be back. Kath Hudson finds out what business has been like since the re-set button was pressed
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Les Mills is launching a new digital network called Les Mills Connect to help clubs build back better and emerge from the pandemic with a stronger business
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Company profile: Core Health & Fitness
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Imagine a short treatment combined with many positive and long-lasting effects that your customers will ...
Catalogue Gallery
Click on a catalogue to view it online
Directory
Wearable technology solutions
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Red Light Therapy
 Red Light Rising: Red Light Therapy
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
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Independent service & maintenance
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Lockers/interior design
Safe Space Lockers Ltd: Lockers/interior design
Spa software
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Fitness equipment
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Property & Tenders
Welwyn Garden City
Welwyn Hatfield Borough Council
Property & Tenders
Newport, Shropshire
Lilleshall Sports Academy
Property & Tenders
Diary dates
13-14 Oct 2021
Online,
Diary dates
01-03 Feb 2022
Coventry Building Society Arena, Coventry, United Kingdom
Diary dates
07-10 Apr 2022
Exhibition Centre , Cologne, Germany
Diary dates
15-16 Jun 2022
ExCeL London, London, United Kingdom
Diary dates
01-07 Dec 2022
tbc, Dunedin, New Zealand
Diary dates
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