Peloton set to charge customers £70 for using second-hand bikes, as brand’s sales finally rise by 0.2%, prompting shares to surge months after large-scale redundancies and restructuring

After a turbulent period characterised by restructuring, a curtailed retailed presence, and a series of layoffs, Peloton has reported its first sales increase in nine quarters, beating analysts’ estimates and sending shares surging as much as 41 per cent.

This rare bit of positive news comes as the American fitness company confirmed that it will start charging customers a £72 “activation fee” when they buy one of their exercise bikes second-hand.

In May, at the same time CEO Barry McCarthy stepped down, 15 per cent of Peloton’s workforce (around 400 people) was made redundant in another round of cuts, a cull which McCarthy claimed was necessary to bring the New York-based brand’s spending in line with its revenue, following three years of continuous losses thanks to sales of connected indoor fitness equipment plummeting as Covid-era restrictions eased.

> Peloton cuts 15% of workforce “to bring spending in line with revenue” – as CEO steps down despite “optimism” beleaguered brand is “on the right path”

McCarthy, a former Netflix and Spotify executive who joined Peloton in February 2022, replacing co-founder John Foley, was responsible – almost immediately – for making 2,800 staff (20 per cent of the total workforce) redundant that same month.

His other tactics for halting the company’s falling sales and revamping its business model included cutting back its own retail presence due to weak demand, ending its app’s free membership option, expanding into corporate wellness, and creating a rental bike programme.

McCarthy also outsourced Peloton’s manufacturing process from the US to Taiwan, and secured deals with Lululemon, Hyatt hotels, and Amazon, the first time Peloton had partnered with a third-party retailer to reach consumers.

These changes and restructuring now appear to finally be paying off, with the American fitness company reporting a 0.2 per cent rise in sales for the fourth quarter, Peloton’s first year-on-year growth since 2021, as the brand’s shares experienced their best day in 18 months.

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Peloton delivered an adjusted core profit and free cashflow for the second consecutive quarter, while its fourth-quarter revenue of $643.6m (£488m) – which was $13m above analysts’ predictions – resulted in an overall loss of $30.5m (£23m), down from $241.8m (£183m) over the same period last year, prior to the latest large-scale cuts and restructuring.

Peloton also revealed that it is has refinanced its debt to avoid a liquidity crunch, giving the company more time to continue its plans to turn things around, which include continuing to search for a new CEO.

“From Q3 to Q4, the narrative has changed from Peloton needing a life jacket immediately to being able to tread water for a bit longer,” Paul Cerro, chief investment officer at Cedar Grove Capital Management, said in response to the figures.

> Peloton’s parting gift to 2,800 employees it just fired? A year’s free membership…

Meanwhile, in another bid to turn the tide on Peloton’s post-pandemic slump, the company today confirmed that it will begin charging customers a $95 (£72) “activation fee” when they buy one of its £1,345 exercise bikes from the secondary market.

Customers who buy a used bike through Peloton’s official resale channels – which charge around double for refurbished, second-hand bikes compared to eBay, for instance, where they can be found for roughly £500 – will avoid the added cost, which will initially only apply in the US and Canada.

Peloton’s customers already pay a monthly subscription fee of £39 to use the brand’s bikes and treadmills, which connect them to online fitness classes and personal trainers.

According to the company, the fee would allow buyers to “receive the same high-quality onboarding experience Peloton is known for”.