'The Company Is Spinning Out': Peloton Considers Store Closures As Stock Price Plummets
Leaders of fitness company Peloton are considering the closure of several retail stores amid concerns over the company’s finances.
Recordings of a call obtained by CNBC revealed talks among Peloton’s management team of cost-saving measures that would curb the impact of reduced revenue. New subscribers have dropped dramatically since hitting all-time highs during the pandemic, when the shuttering of gyms led to a surge in demand for at-home exercise programs.
Low-performing areas, such as the apparel division, could be on the chopping block, per the recording. A Peloton executive on the call said 15 of the 123 stores in the U.S. and abroad are under consideration for closure, and that employees at some locations are being asked to take customer service calls during slow periods.
The reopening of gyms has not been good for Peloton. Its number of new subscribers totaled 161,000 in the three-month period that ended Sept. 30, per CNBC, which is the lowest net addition in eight quarters. At the same time, gyms across the country were seeing increased foot traffic. According to May 2021 mobility data from Advan, activity at nationwide gym chains had recovered to 51% of January 2020 levels and 47% of the levels measured in May 2019.
According to CNBC, Peloton’s market cap has fallen to $10.2B. Company shares — which hit a 52-week low of $29.62 on Jan. 18 — saw a 76% decrease in 2021 after rising more than 440% in 2020.
Internal messages obtained by CNBC revealed conversations among employees about expected job cuts as a result of the company’s dismal stock performance.
“Morale is at an all-time low,” said one employee, who spoke under the condition of anonymity to CNBC. “The company is spinning out so fast.”
The potential shuttering of some brick-and-mortar stores is not the only way Peloton is looking to make up for lost revenue. In November, it put a pause on new hires, and at the end of January, CNBC reports that the company will begin charging delivery and assembly fees of $250 and $350 for its bike and tread products, respectively.
“Right now, people are raising prices. Ikea just raised prices. We want to go in the middle of the pack,” Dara Treseder, Peloton’s chief marketing and communications officer, said in a separate recorded meeting obtained by CNBC.