Peloton records losses of $1.2 billion, a day after announcing agreement to sell products on Amazon US

Peloton Interactive Inc reported a $1.2 billion loss on Thursday, sending shares plummeting by 15 per cent as it records its sixth consecutive quarter of reported losses. 

These losses are reported just a day after shares rose 20 per cent, as Peloton announced it would be selling products through Amazon US for the first time. The Peloton exercise bike costing $1,445 is available, as is the Peloton Guide, for $295.

Selected accessories and apparel are also available for purchase, but Peloton has decided not to offer its Bike+ machine, which starts at $2,495, and its Tread treadmill, which costs at least $3,495, through the online retailer.

Prior to this agreement, Peloton products were sold exclusively through the brand’s own website and exclusive showrooms. However, the company's latest move is in an attempt to boost revenue and brand awareness as it faces sinking demand. 

In the quarter ending June 30, Peloton's Net loss attributable to Class A and Class B common stockholders was $1.24 billion, with sales falling to $678.7 million when compared with $936.9 million from a year earlier.

CEO Barry McCarthy said in a letter to shareholders: "The loss reflects the substantial progress we made this last quarter re-architecting the business to reduce the current and future inventory overhang, converting fixed to variable costs, and addressing numerous supply chain issues."

However, McCarthy, who joined Peloton in February, is confident the company can turn around its fortunes.

“The naysayers will look at our [fourth quarter] financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses. They will say these threaten the viability of the business. But what I see is significant progress driving our comeback and Peloton’s long-term resilience.

"I think Q4 will have been the high water mark for write-offs and restructuring charges related to inventory and supply chain issues and the beginning of the comeback story for Peloton."

In the meantime, Peloton will continue to layoff over 700 workers, increase equipment prices, close retail locations and, for the first time, work with a third-party seller to regain lost profits. 

Peloton chief commercial officer, Kevin Cornils, said: "Expanding our distribution channels through Amazon is a natural extension of our business and an organic way to increase access to our brand."

In February, when former CEO John Foley resigned, 2,800 employees were made redundant, though they were offered a year's free membership to its classes within the redundancy package, provided they already owned a Peloton product themselves to access this offer. 

Barry McCarthy, who previously worked for Spotify, joined Peloton to restructure the company and attempt to halt the slide. Offering its products on Amazon US is part of this restructuring.