Peloton’s UK subsidiary posts £81m loss despite booming lockdown sales

The UK subsidiary ​of at-home fitness brand Peloton has posted a £81 million operating loss for the year to 30 June 2021 despite seeing sales here nearly treble during the 12-month period as a result of lockdown.

The news comes in a month in which the New York City-based brand’s CEO, brought on board earlier this year to try and turn it around, said it had six months to prove it could succeed as an independent business – although he subsequently tried to downplay those comments.

Turnover at the group’s London-based Peloton Interactive UK Limited during the 2020/2 financial year rose by 182 per cent, riding from £52.1 million in the previous financial year to £147.1 million in the 12 months ended 30 June 2021.

In its accounts for the period filed at Companies House earlier this month, to “increased brand awareness as well as the stay-at-home orders issued by the UK government in March 2020 due to the Covid-19 pandemic.

The company’s operating loss, which had stood at £50.0 million in 2019/20, was 63 per cent higher in its latest accounting period, coming in at £81.4 million, which the company said was “due to increased marketing costs incurred as we built brand awareness.”

Sales of hardware – meaning connected fitness units such as the company’s signature bikes and its treadmill, plus accessories and shipping – made up 81.1 per cent of UK revenue in the latest financial year.

During the same period, revenue from subscriptions to Peloton’s online fitness classes stood at £25.4 million, a fourfold increase on the previous 12 months.

In 2020 and for much of 2021, Peloton saw sales boom in its key markets – the United States, Canada, United Kingdom and Germany – as lockdown and the consequent closure of gyms meant people looked for ways in which they could exercise at home.

The company, founded 10 years ago and listed on New York City’s Nasdaq exchange, was featured in a number of press articles highlighting companies that had thrived during the pandemic.

However, global demand slumped after restrictions were eased during 2021, with the company cutting jobs, closing some showrooms and shelving plans to begin manufacturing hardware in the United States rather than the Far East.

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Earlier this month, the company cut a further 500 jobs worldwide, leaving it with 3,800 staff around the globe, less than half the level it had at the height of its boom caused by the pandemic.

Announcing the job losses in an interview with the Wall Street Journal, Barry McCarthy – who replaced founder John Foley as CEO and President in February – said that the company needed to prove within the next six months that it had achieved a strong enough turnaround in its fortunes to be able to survive as an independent company.

“There comes a point in time when we’ve either been successful or we have not,” he explained.

But following concerns sparked by his comments among both investors and employees, he sought to allay their concerns, saying in a statement: “I joined Peloton for the comeback story, not to sell the business.

“And today the business is fundamentally more sound than ever and on the right path, so to be clear, there is no timeclock nipping at our heels.”

“If my comments to the WSJ suggested otherwise, then I misspoke, as that is simply not true.

“Restructuring a business requires difficult decisions that affect people's lives. I'm grateful for the many contributions of those who have been impacted.

“The changes we have made, combined with the performance of the business, are moving us closer to our fiscal year-end goal of break-even cash flow, with a renewed focus on growth.

“We are in the business of driving performance, and the business is indeed performing. By any measure, we have made remarkable progress in record time,” he added.