Peloton Sales Plunge after Short-lived Pandemic Boom
Peloton Interactive Inc. has cut down its revenue projections by $1 billion along with lower profit margins and subscribers, reflecting its struggle to adjust to the post-pandemic economy. Peloton, known for its remote classes and exercise bikes, is now looking for sales in the region of $4.4. billion to $4.8 billion for the fiscal year ending in June 2022. The Fitness company had predicted revenue of $5.4 billion less than three months ago. On a call with analysts, Peloton said that they had underestimated the impact after the reopening of the economy. The bleak outlook sent stocks tumbling by 30% to $60.12. Even before the collapse, shares were down by 43% for 2021, as per Bloomberg news. Peloton’s good performance was a pandemic outcome when customers looked to home exercise services during the lockdown. With people now going back to offices, schools, and regular
gyms, the demand for Peloton’s gym products has come down. The rising cost of commodities along with supply chain bottlenecks has also impacted Peloton.
Breaktime In a letter to its shareholders on Thursday, the management said, “We had anticipated 2022 fiscal to be challenging and are taking necessary steps to cut operating costs and re-examine the expense base“. In a best-case scenario, Peloton expects to have 3.45 million fitness subscriptions by the end of the fiscal year. Previously, it forecasted 3.63 million. The gross profit margin will be 32% compared to the 34% predicted earlier. This will all add up to around a $475 million loss. John Foley, Co-founder, and CEO said that the swift change and limited visibility into the future are not lost on the company. The traffic to Peloton store tapered more than what was anticipated, as per the executives of Peloton. However, the company saw a positive response to its price rejig and international launches, especially in Australia. In August, the company cut its bike price by $400. That has also hurt its profitability as more than expected buyers preferred that product over others.
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