Peloton Interactive (NASDAQ:PTON) Inc, the expensive exercise machine maker, is finding itself peddling uphill as lockdown restrictions ease around the world.
The company is cutting the prices of some of its products as the impressive growth rate of the topline begins to cool.
Sales in the final quarter of the company’s fiscal year came in ahead of analysts expectations at US$937mln, up from US$607mln a year earlier, but the firm predicted that sales in the current quarter would be around US$800mln.
The fourth-quarter loss of US$313.2mln, equivalent to US$1.05 a share, was heavier than the market had been expecting; the consensus forecast was for a loss per share of 44 cents.
Demand for the company’s equipment soared during lockdown, as exercise junkies happily paid up to hear a disembodied voice shout encouraging platitudes at them while they sweated away.
Demand was so high that the company was unable to keep up.
In May of this year, the company recalled treadmills in the UK and US after US authorities identified safety concerns following the death of a six-year-old child.
Peloton had 72 reports of injuries such as broken bones, cuts and grazes and admitted it should have recalled the treadmills sooner.
With fitness freaks now able to return to the gym, the company seems no longer able to charge exorbitant prices for its equipment and has cut the price of its flagship Bike product for the second time this year.
“In the near term, our profitability will be impacted by the price decrease in our original Bike, significant increases in commodity costs and freight rate increases, a sales mix shift to Tread, investments in marketing to broaden our appeal, accelerated investments in new products and features, investments to scale our member support and logistics operations, and significant investments in systems to support our growth,” the company said in a letter to shareholders.
Shares in Peloton were down 6.3% at US$106.94 in after-hours trading, having been down 11% (feel the burn!) at one point.