Peloton Spending Big to Speed Up Shipment

Despite supply chain constraints that caused major delivery delays, Peloton had its first $1 billion quarter. 

The connected fitness giant reported revenue of $1.06 billion in its second fiscal quarter, 128% growth from the $466.3 million it hit a year ago. Earnings grew to $63.6 million from a loss of $55.4 million a year ago. 

Peloton bumped up its full-year revenue forecast slightly — from $3.9 billion to $4.08 billion — but its earnings outlook for 2021 has not changed.

• The company said it will invest over $100 million in air and ocean freight over the next six months to meet exceedingly high demand, which has held up shipments.
• “While this investment will dampen our near-term profitability, improving our member experience is our first priority,” the company said in a letter to shareholders.

On top of the freight investment, Peloton has a pending acquisition of exercise equipment manufacturer Precor for $420 million. Access to Precor’s two U.S. manufacturing facilities is expected to help increase inventory levels.

As the pandemic carries on, competition in the at-home fitness space has swelled — from Lululemon’s acquisition of Mirror to the launch of Apple Fitness+. Overall sales of health and fitness equipment more than doubled to $2.3 billion between March and October, according to The NDP Group. 

Peloton shares are up over 365% from last year, but dropped nearly 6% today.