Peloton Posts 141% Sales Growth on Robust Demand for Fitness Equipment

By Adriaan Brits Friday, May 7, 2021

Fitness equipment company Peloton reported its business sales surged 141% in Q3, driven by an increased delivery pace following the company’s recent investments in its supply chain.

Business growth concept.

Strong Business Sales, a Thread Recall Hurting Outlook

Despite this, the fitness company faced another challenge recently and had to recall all of its treadmills after a child died in an accident involving the Tread+ machine while dozens were injured.

The recall has terminated business sales of two treadmill models while it delayed the rollout of a cheaper version in the United States (US). Peloton said it expects the recall to slash Q4 business sales by $165 million.

The fitness company now estimates $915 million in sales in Q4, compared to analysts’ expectations of $1.12 billion analysts, according to the data provided by Refinitiv.

The New York-based company also expects to face additional costs as it is providing customers full refunds and plans to free customers from all membership payments for three months. Peloton expects this to wipe around $16 million off its Q4 adjusted business profits.

“Our goal is to have the best safety features for treadmill products on the market. There will be a short-term financial impact due to the steps we’re taking,” said Peloton CEO John Foley.

On a more positive note, Peloton said the demand for its cycles, the company’s core business, remains robust and expects business sales of those cycles to triple from where they stood two years ago. Peloton said that sales were fueled by the increased pace of expected deliveries.

In the quarter ended March 31, Peloton’s loss per share came in at $0.03, compared to analysts’ estimates of $0.12 per share. Revenue stood at $1.26 billion against the expected $1.1 billion. The company said it recorded a net loss of $8.6 million from a loss of $55.6 million a year ago.

Total business revenue soared 141% to $1.26 billion from $524.6 million a year ago and more than the consensus of $1.1 billion.

Business sales from connected fitness devices erupted 140% to $1.02 billion, which accounts for 81% of Peloton’s total business sales. Subscription revenue surged 144% from a year ago to $239.4 million and represents 19% of total revenue, the company said.

The number of connected fitness subscriptions stood at 2.08 million at the end of the quarter, up 135% from year-ago levels.

Peloton said it would inject $100 million in air freight and expedited ocean freight over a six-month period to accelerate shipments. The company also recently bought fitness equipment manufacturer Precor for $420 million in an effort to improve its production capabilities in the US.

“While progress has been made, additional work remains to reduce delivery times across the remainder of our product portfolio and regions,” Foley said in the statement.

The company also said that it is making progress with its plans to expand to Australia.

Summary

Fitness equipment company Peloton said its sales soared 141% in its Q3 earnings report, partly driven by shorter delivery times after its investments into the supply chain. However, the company is facing a major issue after it was forced to recall all of its treadmills over safety concerns.

About the Author


Headshot for author Adriaan Brits
As an analyst of global affairs, Adriaan has an MSC from Oxford, with diverse interests in the digital economy, entertainment, and business. He is a specialist trainer in Advanced Analytics & Media.

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