Business

Peloton suffered a loss charge of $182 million last quarter as inventory piled up


A Peloton stationary bike goes on sale at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, February 3, 2021.

Adam Glanzman | Bloomberg | beautiful pictures

PelotonIts goodwill hit $182 million in the previous fiscal quarter as inventories swelled and consumer demand for bicycles and treadmills dwindled.

During the three-month period ending March 31, Peloton identified various factors that indicated a “trigger event” for the loss charge, The company said in a 10-Q filing Tuesday with the Securities and Exchange Commission. The charge is purely related to its connected fitness products.

Those factors have resulted in reduced demand, higher inventory and logistics costs, and a steady decline in the company’s stock price, Peloton said in the filing. The company’s market capitalization has dropped to about $4.5 billion from a high of about $50 billion early last year.

Peloton’s loss for the latest quarter amounted to $757.1 million, compared with a loss of $8.6 million a year earlier, the company reported on Tuesday morning.

Revenue fell 24% to $964.3 million, marking Peloton’s first year of revenue decline since it went public in 2019.

Peloton, now run by Chief Executive Officer Barry McCarthy, gave a weaker-than-expected outlook for the current quarter ending June 1, saying demand is likely to continue to be low in the near-term.

As demand receded from the peak of the pandemic, Peloton’s inventory grew significantly in the most recent period to a total of $1.4 billion on the company’s balance sheet, compared with $937.1 million. la a year earlier. The 10-Q filing, Peloton said, is almost entirely made up of finished products that are either in storage or in transit for the company to pick up.

CNBC reported in late January that Peloton is planning to suspend production of some of its devices to re-establish inventory levels. CEO and co-founder John Foley responded by saying Peloton needed “right size” production level.

McCarthy, the new CEO, said Tuesday that Peloton hasn’t made “quite as much progress in manufacturing the right size” as it should.

He said the company’s supply chain team, now led by Andrew Rendich, has been working closely with partners to order parts with longer lead times.

Peloton was able to cut its commitment to third-party suppliers from about $550 million as of December 31, to between $120 million and $280 million, the company said in its 10-Q filing. me.



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