A pile up of losses

A pile up of losses

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  • Fresh from its newly announced tie-up with Amazon (AMZN, $137.28), Peloton (PTON, $11.01) was brought back to earth after its disastrous earnings uncovered the mess at the fitness company. Figures show that it recorded losses of more than $1.2bn in the past three months causing its shares to plummet. Investors are said to be frustrated especially after searching for progress in the company’s efforts to revive sagging sales of its fitness equipment.

  • The company’s shares declined more than 20% – a day after the stock surged more than 20% on news of its partnership with Amazon. Shares tumbled to $10.88 in morning trade, adding to an 88% drop over the year. Peloton’s net loss widened in the three-month period which ended June 30th, to $1.24 billion, or $3.68 per share, from a loss of $313.2 million, or $1.05 a share, a year earlier.

  • Peloton CEO Barry McCarthy said he expects the market for connected fitness will remain challenging for the foreseeable future, as consumer demand for at-home workout machines wanes from Covid pandemic highs.

Why it matters

The earnings call marked Peloton’s sixth consecutive quarter of reported losses. Post-Covid demand nosedived as gyms reopened following vaccinations, forcing the company to rejig its top management. Chief executive Barry McCarthy, has rolled out measures to cut costs through layoffs, store closures and outsourcing manufacturing, as well as reduce inventories since taking over in February. In his latest effort, Peloton on Wednesday said it would start selling its fitness equipment on e-commerce giant Amazon in the United States, fueling a 20% jump in shares.

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