Peloton, the maker of tech-connected exercise bikes, experienced a losing streak in the first three months of the year as the popularity it enjoyed during the pandemic waned.
Sales fell 24% year over year due to falling demand for bikes and treadmills, the company said.
The company replaced its chief executive in February and shed thousands of jobs to restart growth.
But new boss Barry McCarthy warned investors: “Turnarounds are tough.”
Losses for the quarter increased to $757 million for January through March, up from $8.6 million for the same period in 2021.
The company warned investors that growth will remain difficult and forecast earnings for the upcoming quarter of between $675 million and $700 million — well below last year’s and analysts’ forecasts.
Peloton’s shares — which have already fallen about 60% this year — fell more than 15% to record lows after the company announced earnings.
Mr McCarthy, who joined the company after stints at Spotify and Netflix, said he was encouraged by the growing number of subscribers to the company’s streaming fitness classes.
The firm, which says it has around 7 million members, said subscription revenue was up 55% from a year earlier and the rate of subscription cancellations was very low.
However, Peloton is preparing to raise prices, which could result in more people terminating the service.
“Leading indicators are that the associated churn will be low, but we won’t know until we know,” McCarthy said.
Peloton’s growth has boomed during the pandemic, with sales more than doubling in the most recent fiscal year.
But the company struggled to meet that demand, causing product delays.
As gyms reopened and workout routines began to change, it was also hit by a recall and other marketing issues, including warnings that its bikes were vulnerable to hacks.
Earlier this year, Peloton scrapped plans to open its first US factory.
Executives said they are now sitting on a large inventory of unsold devices, despite price cuts over the past month.
“We believe the inventory will eventually be sold, so this is primarily a cash flow timing issue, not a structural issue,” he said.
But Michael Hewson, chief market analyst at CMC Markets UK, said the company’s huge inventories are a problem, especially as there are few signs that demand will recover.
“That high inventory is a problem for a cash-strapped company,” he said.
Mr McCarthy said the company took out a $750 million loan in response to its dwindling cash supply, which he described as the biggest “surprise” of the quarter.
He said he sees opportunities to expand the business outside of the US and recruit more men, noting that currently about 80% of members are women.
But as the company tries to gain a foothold, he said his top priority is containing losses.
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