Peloton Financial Struggles Continue: Losses Wider Than Expected
Peloton, on Wednesday, reported losses wider than anticipated, citing a quarterly drop in new subscribers. The decline was attributed to its recall of the Bike seat post and seasonality factors. These revelations caused Peloton’s shares to plunge approximately 25% in premarket trading. The company fell short of analysts’ earnings estimates, but it did manage to surpass sales expectations.
The fitness company’s financial performance in its fourth fiscal quarter did not align with Wall Street’s predictions, based on a Refinitiv analysts’ survey. The company reported a net loss of $241.8 million, translating to 68 cents per share, for the three-month period ending June 30. This loss is a significant shift from the previous year’s loss of $1.26 billion or $3.72 per share. Sales also saw a dip from $678.7 million a year earlier to $642.1 million.
Peloton’s Fiscal Fourth Quarter Performance
The fiscal fourth quarter, falling during the summer months, is traditionally slow for Peloton and other fitness retailers. Consumers tend to pull back on workouts during this season due to travel and other summer plans. In May, CEO Barry McCarthy warned that the fourth quarter would be among the most challenging growth periods. For the first time, Peloton projected a decline in subscribers.
Peloton ended the quarter with 3.08 million subscribers, a 4% year-over-year increase and in line with the company’s expectations. However, compared to the previous quarter, subscribers declined by 29,000. This drop was attributed to a “seasonal” slowdown in hardware sales and higher than expected churn. McCarthy, in a letter to shareholders, noted that the slowdown exceeded expectations through May and the first three weeks of June as consumer spending shifted towards travel and experiences. However, eight weeks ago, the trend reversed, and they began to see a reacceleration in hardware sales.
New Strategies and Rebranding Efforts
The former Netflix and Spotify executive spent the past three months focusing on new strategies aimed at getting the fitness company back on a path to growth. In May, Peloton announced a significant rebrand under the guidance of its new chief marketing officer, Leslie Berland. The rebrand positions Peloton as a fitness company for everyone, just as invested in its app as its pricey connected fitness products, such as its Bike, Tread, and Row.
Peloton also unveiled new pricing tiers for its fitness app, including a free membership option and levels costing $12.99 and $24 monthly. The app allows consumers to watch Peloton’s fitness classes and build their workouts from wherever they are, including their home gym.
Business-to-Business Strategy and Partnerships
Peloton has been leaning into its business-to-business strategy to further drive revenue and capture new customers. It launched Peloton for Business, which lets companies offer access to the app and its connected fitness products through benefits offerings. Clients include Volvo and Dropbox, who offer their employees access to Peloton’s app, its all-access membership, and discounts on hardware.
Peloton also launched a new program aimed at partnering with colleges and universities. It kicked off this strategy by partnering with the University of Michigan to create co-branded Peloton bikes for the school’s fitness facilities and football stadium. Additionally, it unveiled a new discounted offering for college students of its “One” tier, reduced to $6.99 a month from $12.99.
The full earnings release can be found [here](https://investor.onepeloton.com/static-files/3f464ec7-507f-47e2-a5ae-45c35feb1711).
Original Story at www.cnbc.com – 2023-08-23 11:28:11
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