Peloton slides as bleak forecast douses hopes of quick turnaround

© Reuters. FILE PHOTO: A stationary bicycle inside of a Peloton store is pictured in the Manhattan borough of New York City, U.S., January 25, 2022. REUTERS/Carlo Allegri/File Photo

(Reuters) -Peloton Interactive Inc on Thursday forecast first-quarter revenue below Wall Street estimates, signaling that its recently launched turnaround effort will take more time to help revive sagging sales of its fitness equipment.

The company's shares tumbled more than 15% to $11.42 in premarket trading, set to add to the more than 60% drop so far this year.

Peloton (NASDAQ:PTON)'s exercise bikes, which are priced at above $1,400, treadmills and connected classes were all the rage among fitness enthusiasts during COVID-19 lockdowns. But demand nosedived as gyms reopened following vaccinations.

Chief Executive Barry McCarthy, who has worked at Spotify Technology SA (NYSE:SPOT) and Netflix Inc (NASDAQ:NFLX), has focused on cost cuts through layoffs and store closures, outsourcing manufacturing and slimmer inventories since taking over in February.

On Wednesday, Peloton said it would start selling its exercise bike and other fitness accessories on e-commerce giant Amazon.com Inc (NASDAQ:AMZN) in the United States, fueling a 20% jump in shares.

The restructuring efforts resulted in operating expenses more than doubling to $1.17 billion in the three months to June 30.

Fourth quarter will have been the high water mark for write-offs and restructuring charges, McCarthy said in a letter to shareholders.

The company expects first-quarter sales to be in the range of $625 million to $650 million, below analysts' average estimate of $783.28 million, according to Refinitiv IBES data.

"Given its level of cash, inventory, and cash burn, we view existential threats on Peloton as rising," said MKM Partners analyst Rohit Kulkarni.

Net loss attributable to Class A and Class B common stockholders widened to $1.24 billion, or $3.68 per share, in the fourth quarter, from $313.2 million, or $1.05 per share, a year earlier.

Sales fell about 28% to $678.7 million.