After the epidemic was lifted, consumers in the United States and some Europe returned to the gym, which caused a sharp drop in demand for home flywheels and treadmills of Peloton, a major American home fitness equipment manufacturer. The revenue fell and losses increased, severely damaging the company's operations. After a series of corporate restructuring, Paraten announced on the 12th that it would raise the prices of some products in the hope of achieving profits. At the same time, it is also continuing to downsize internally and plans to close some physical stores starting in 2023. As soon as the news came out, investors seemed to give Paraton recognition, pushing the stock price up by more than 13% in a single day.
Paraton lowered the prices of flywheel bikes, bikes and treadmills in April this year, making it easier for people to obtain and become members, and accelerating inventory sales to bring in urgently needed cash flow . Now, the prices of Bike and Tread have been raised. Taking the United States as an example, the price of Bike has increased by US$500 to US$2,495, and the price of Tread has increased by US$800 to US$3,495. The prices of other products such as Canada, the United Kingdom, Germany, and Australia have also increased simultaneously. The price remains unchanged.
Paraten also issued an internal memo to employees on the 12th stating that the company will further downsize its team and lay off 784 people. This is the third known layoff this year. Among them, Paraten plans to close the remaining warehouses and entrust relevant work to third-party logistics providers, withdrawing from the last mile of logistics and distribution, which will reduce some job opportunities; it will also downsize some positions in the customer support team and also outsource them. These teams are mainly located in Tempe, Arizona, and Plano, Texas.
Paraten also plans to close physical stores. Although it did not specify how many stores it plans to close from the current 86 physical stores, it only stated that it will "actively" close stores starting in 2023. The speed of closing stores depends on the actual progress of the lease withdrawal. .
These changes are part of the plan of newly appointed CEO Barry McCarthy this year. His biggest task now includes getting rid of some fixed costs and finding more ways to profit from loyal members. He said through an internal memo that the above decisions are difficult choices for the company. If the company wants to have positive cash flow, these changes are inevitable. He said, "Cash represents oxygen , and oxygen has life. We must Self-sufficient on the basis of cash flow”
(First image source: Peloton)
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