Peloton reveals new measures to cut costs
Peloton Interactive Inc (NASDAQ: PTON) is up 15% on Friday after the connected fitness company made a string of announcements that reiterated its commitment to “profitability”.
Peloton is cutting jobsCopy link to section
The Nasdaq-listed firm says it will cut 780 jobs (including in-house support team) and shutter an undisclosed number of retail locations to minimise costs. It also partnered with 3rd party providers to quit last-mile logistics. In a memo to employees, CEO Barry McCarthy wrote:
The shift of our final mile delivery to 3PLs will reduce our per-product delivery costs by up to 50%. These expanded partnerships mean we can ensure we have the ability to scale up and down as volume fluctuates.
Once a pandemic darling, the Peloton stock is currently down more than 65% versus its year-to-date high in early February. Still, Wall Street currently has a consensus “overweight” rating on PTON.
Peloton is raising pricesCopy link to section
Store closures, as per Peloton, will start in 2023. On top of that, the fitness equipment manufacturer announced a $500 and $800 increase in the price of its Bike+ and Tread, respectively.
Earlier this year, PTON terminated in-house production and doubled down on its agreement with Taiwan-based Rexon Industrial. CEO McCarthy has been announcing these moves since he joined in February to put the company on the path to profitability.
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Peloton Interactive is expected to report its results for the fiscal fourth quarter on August 25th. Consensus is for it to lose 71 cents a share (unchanged from last year) on $722 million in revenue (down 23% year-over-year).