Peloton’s latest earnings report has revealed a notable write-down on its Peloton Guide inventory.
In the earnings report, Peloton disclosed a write-down of $9.1 million for its Peloton Guide product inventory. According to the report:
Total Gross Profit was $309.7 million for the three months ended March 31, 2024, yielding a Total Gross Margin of 43.1% (versus our 42.5% guidance). Our Connected Fitness Products Gross Margin was 4.2%, in-line with internal expectations. Excluding the impact of a one-time write down of $9.1 million for Guide product inventory, our adjusted Connected Fitness Products Gross Margin was 7.4% in Q3.
A write-down is an accounting procedure used to reduce the value of an asset on the balance sheet when its fair market value drops below the carrying value. In simpler terms, it reflects a downward adjustment in the value of inventory to more accurately reflect its current market value. This adjustment is typically made when inventory becomes obsolete, damaged, or is expected to be sold at a loss.
In Peloton’s case, the decision to write down its Peloton Guide inventory suggests that the company believes the product’s market value has decreased or it has become less relevant to consumer demand. In other words, Peloton could be facing serious challenges in driving demand for the Guide, and has experienced lower than anticipated sales.
This suggests that Peloton has a massive backlog of Guide inventory sitting in warehouses. Moreover, this suggests that recent sales of the Guide for only $95 or even giving the device away for free with a qualified hardware purchase – which Peloton has done in recent months – will continue while Peloton tries to offload some of their inventory and stimulate more demand for the product.
The Guide typically retails for $195. Peloton permanently lowered the price from its previous price of $295 back in February of 2023. However, as mentioned above, it is becoming fairly common for sales every few months to see it priced at $95.
You can catch up on all the news from Peloton’s latest earnings report and corresponding investor call – including CEO Barry McCarthy stepping down and the layoff of 400 Peloton employees – via our site.
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Love the guide. One of the best fitness ‘investments’ we’ve ever bought. Once you’ve tried it you’ll not want to do without it.
I dig it, too. Travels easy also.
I agree once set up it is easy to use and I really like it