Peloton’s lockdown boom looses momentum as UK sales slide

Sales at the UK arm of Peloton have fallen after the end of Covid restrictions put the brakes on the interactive exercise bike firm’s lockdown boom.

The US brand’s British business reported that sales had decreased by 13% in its last financial year and that losses had widened.

Peloton Interactive UK said turnover had fallen to £127.8m in the year to 30 June 2022, down from £147m in the 12 months before. In accounts filed at Companies House, the firm’s directors said the fall was “due to slowing sales, reflecting the impact of the Covid-19 pandemic on our hardware sales”.

The results reflect a slowdown for a brand viewed as a “winner” from Covid lockdowns. UK sales of Peloton, which sells bikes, treadmills and online fitness classes, nearly trebled during the first year of the pandemic as its equipment became sought after by Britons seeking exercise while stuck at home.

Some customers have since said they are struggling to resell the £1,300 bikes and have resorted to using them as expensive clothes racks.

The US parent company floated on the stock market in 2019 and its share price rose steeply during the pandemic, reaching $162 (£126) in late 2020. The price has since slumped to about $8 and last year the company announced it would cut more than 3,000 jobs as part of a cost-cutting drive.

Losses at its UK business more than double from £81m to £210m. Administrative costs related to its expansion rose 47%, while the “gross margin on hardware deteriorated”.

The company racked up costs by opening a fitness studio in a grade II warehouse in Covent Garden, London. The studio, which contains three gyms, was just the second such site the company had opened worldwide, after its New York studio.

It also recorded nearly £37m in restructuring costs as the group decided to stop manufacturing its own bikes to cut costs.

The UK business said it was “looking critically” at its cost base, including the “rationalisation of our retail footprint as well as outsourcing an increasing proportion of our delivery operation”. Peloton has eight retail sites in the UK, including six concessions in John Lewis department stores.

Last month, Peloton Interactive Inc, the US parent company, reported that cash burn had slowed as its efforts to cut costs through redundancies and store closures bolstered its balance sheet.

The company is now repositioning its brand to appeal to consumers exercising out of the house, as well as at home.

Peloton, which has nearly 700 UK employees, also noted that the cost of living crisis could affect customer spending. However, it said subscription revenues had increased sharply – up 89% on the year before – as it continued to “add members and experience low churn rates”. Peloton’s fitness units, including the bikes, accounted for £78m of sales, with subscriptions at nearly £48m.

A spokesperson said: “International markets continue to be a focus and area of growth for Peloton … Full-year 2022 was a transformational year for Peloton as we began to restructure our operations, reduced headcount, and outsourced manufacturing of connected fitness units.

“This update reflects the changes Peloton has made in creating a sustainable structure that allows us to focus on growth and continue to deliver an amazing member experience.”