Peloton Interactive Inc on Thursday provided a first-quarter revenue forecast that was below Wall Street expectations, indicating that it would take more time for its recently launched turnaround effort to help boost declining sales of its fitness equipment.
In premarket trading, the company’s shares fell more than 15% to $11.42, adding to a year-to-date decline of more than 60%.
During COVID-19 lockdowns, Peloton’s exercise bikes, which cost over $1,400, treadmills, and connected classes were extremely popular with fitness enthusiasts. But as gyms reopened after vaccinations, demand plummeted.
Since taking over in February, Chief Executive Barry McCarthy, who has previously held positions at Spotify Technology SA and Netflix Inc., has concentrated on reducing costs through store closings and layoffs, manufacturing outsourcing, and smaller inventories.
A 20% increase in shares followed Peloton’s announcement on Wednesday that it would begin selling its exercise bike and other fitness accessories on the world’s largest online retailer, Amazon.com Inc.
Operating expenses more than doubled to $1.17 billion in the three months leading up to June 30 as a result of the restructuring efforts.
According to McCarthy’s letter to shareholders, write-offs and restructuring charges will have reached their peak in the fourth quarter.
According to Refinitiv IBES data, the company projects first-quarter sales to be between $625 million and $650 million, which is less than the analysts’ average projection of $783.28 million.
According to MKM Partners analyst Rohit Kulkarni, “We view existential threats on Peloton as rising given its level of cash, inventory, and cash burn.”
The fourth quarter net loss attributable to Class A and Class B common stockholders increased from $313.2 million, or $1.05 per share, to $1.24 billion, or $3.68 per share.
Sales decreased by about 28% to $678.7 million.
