Peloton has reported a falling demand for its exercise equipment while also disclosing ongoing supply chain challenges.
Competition for the fitness company has heightened as the company struggles to keep equipment sales going and people patronizing its business model.
The fitness company’s shares took a dip by more than 25% on Thursday as the company reported a weakening sales growth and loss that surpassed its expectations for its fiscal first quarter.
Peloton slashed its outlook for the full fiscal year amid softened demand for its exercise equipment and challenges with its supply chain. Many consumers have chosen to return to gyms like Equinox and Planet fitness, while other fitness junkies have turned their attention to other at-home options from the variety of companies that sell everything fitness related.
“We knew it would be a challenge to forecast fiscal 2022, considering the unusual year-ago comparisons, uncertain demands amidst the reopening economy, commodity cost pressures and supply chain challenges. John Foley, Peloton CEO, said in a letter to shareholders. He also added that a slower-than-anticipated start to the second quarter challenged visibility in the near term, reducing the company’s expectations.
Peloton had reported a net loss of $376 million for three months by the end of September. This is a notable loss compared to its net income of $69.3 million a year earlier. However, revenue also grew by 6%, from $757.9 million to $805.2 million missing its $810.7 million by $5.5 million.
The company’s sales of its connected fitness products, including its bikes and treads, fell by 17%. This was a significant reduction from the 250% sales surge that the company recorded in the first quarter of 2020 when people were enthusiastic about buying at-home fitness and workout equipment when gyms were closed.
Sales and marketing expenses increased by 148% to $284.3 million, which made up about 35% of revenue. The company has spent dollars on advertising its now less-expensive Tread treadmill machine and Bike product. The Tread treadmill was only recently placed back on sale in the United States after a widespread recall.
Peloton is set to battle increased competition as companies like Hydrow, Tonal, and Mirror are winning over customers in the at-home fitness market, while Planet Fitness hit a record high with its shares earlier on Thursday after the gym chain offered a better-than-expected outlook.
Because of the uncertainty that is rife with the pandemic, Peloton has now said it will start presenting its outlook in ranges instead of single estimates.