Peloton signals lift from turnaround efforts, shares jump

By Kannaki Deka

(Reuters) -Peloton Interactive reported its first sales increase in nine quarters and beat estimates, signaling that the fitness equipment maker’s turnaround efforts were paying off, sending its shares up 15% in premarket trading on Thursday.

The maker of high-end stationary exercise bicycles and treadmills reported a 0.2% rise in sales for the fourth quarter, the first year-on-year growth since the second-quarter of fiscal 2022.

“While the growth was modest, it is notable given that it came during the summer when sales are typically slower because consumers often head outdoors to work out,” Emarketer analyst Zak Stambor said.

Barry McCarthy, who stepped down as CEO in May after nearly two-years in the role, had focused on reaccelerating growth by increasing the company’s subscriber base through its app offerings and rental bike program.

The company has made its equipment available for rent, and installed Peloton (NASDAQ:) bikes and rowing machines at 800 Hyatt properties. It has also partnered with third-party retailers such as Amazon.com (NASDAQ:) and Dick’s Sporting Goods (NYSE:) to sell its products.

Peloton also delivered an adjusted core profit and free cash flow for the second consecutive quarter, helped by the former CEO’s efforts to shrink the company’s bloated cost structure.

Earlier this year, the company unveiled a broad restructuring plan that included cutting global headcount by 15%, closing more retail showrooms and changing its international sale plan.

It also refinanced its debt to avoid a liquidity crunch, giving the company more time to execute its turnaround plan.

Peloton reported fourth-quarter revenue of $643.6 million, above analysts’ expectations of $630.5 million, according to LSEG data.

Net loss narrowed to $30.5 million, from $241.8 million a year earlier.