It’s looking like more bad news for Peloton as the once thriving exercise company continues to fly downhill — and fast.
Ezra Shaw | Getty Images
The company reported its fiscal Q4 2022 earnings which amounted to a net loss of $1.2 billion ($415 million of which to company attributed to restructuring changes) and a 28% revenue decrease from the same time period a year earlier, making this the company’s sixth consecutive quarter of lost profit.
Peloton also predicted that it would not reach breakeven cash flow until the second half of the fiscal year 2023.
“The loss reflects the substantial progress we made this last quarter re-architecting the business to reduce the current and future inventory overhang, converting fixed to variable costs, and addressing numerous supply chain issues,” Peloton CEO and President, Barry McCarthy, said in a letter to shareholders. “This progress, plus the reduced cash flow burn, is the positive story behind the headline loss.”
McCarthy then touched on layoffs that hit the company earlier this month (roughly 760 employees) and how the release of those employees would open up space to reduce expenses, before announcing that the company will be bringing on Liz Coddington as CFO of Peloton, formerly of Amazon’s AWS division.
That announcement comes as no shock, as on Wednesday, Peloton revealed that it would be teaming up with Amazon to begin retailing its famed bike ($1,445) and Peloton Guide strength training program ($295) and accessories like dumbbells, water bottles and resistance bands through the retailer marking Pleoton’s first-ever partnership with a third-party retailer.
Moving away from direct to consumer might have once seemed bleak for the recognizable brand, but now seems opportunistic.
So, opportunistic, in fact, that Peloton shares went soaring over 20% on Wednesday upon the news.
“Yesterday, we announced first generation Bikes, Guide, select apparel, and accessories are for sale on amazon.com in the U.S. Amazon has become the default first-stop shopping destination for hundreds of millions of customers worldwide,” McCarthy said in Thursday’s shareholder letter. “Our Peloton store on amazon.com will bring a selection of our products closer to Amazon’s U.S. customer base and allow us to directly act on fitness-related shopping queries occurring on Amazon every week.”
Peloton’s Bike+ and Tread will still only be available exclusively through Peloton, direct to consumer.
But upon Thursday’s news of mounting losses, the company’s stock shot back down another 20%.
Yet McCarthy remains optimistic about the company’s future, despite predictions of continued loss throughout the rest of the year and beyond.
“If past is prologue, we’ll continue to evolve our operating model and improve our management of the business, including our approach to managing retail stores, third party distribution, international, apparel, as well as corporate health and wellness. But, when, in time, we look in the rear-view mirror, I think Q4 will have been the high water mark for write-offs and restructuring charges related to inventory and supply chain issues and the beginning of the comeback story for Peloton,” he wrote.
For those following Peloton’s downward spiral over the past year, this comes as no surprise — the brand has essentially been in freefall thanks to several factors, including mass layoffs and restructuring changes (including the departure of CEO John Foley), rumors of an acquisition by Nike or even Amazon, multiple lawsuits on account of unsafe equipment, and the halting of production of certain workout machines.
“A lot has changed at Peloton in a relatively short period of time. I get that. I know at times that’s come with lots of adversity and challenges,” former CEO John Foley said of the company earlier this year. “However, I deeply believe that getting back to basics, in many ways, will help us execute with precision and innovation, and that will lead to even greater impact in the long term for all of us who are part of the Peloton journey.”
As of Thursday afternoon, Peloton was still down 19% in a 24-hour period and over an astounding 90% year over year.
