Peloton stock is up 10% after striking a new deal
Peloton Interactive Inc (NASDAQ: PTON) share prices went up 10% after the media and fitness equipment company based in America announced it will be partnering with Amazon to try and regain the confidence of its investors and broaden its existing customer base, as its share price drops and revenue growth slows down from pandemic highs.
In its first attempt to operate outside its direct-to-consumer business model, which is its core principle, the company will start hawking some of its connected-fitness accessories and equipment on Amazon.
Details of the agreement
Some of the things it’ll be looking to hawk include the company’s original exercise bike, which goes for around $1,440. It’ll also sell Peloton Guide, its strength product which goes for around $295. Excluded from this batch are Peloton’s more expensive Tread treadmill and Bike+ machines.
This deal will mark the company’s first partnership agreement with a separate retail group to sell its products. Until now, Peloton has relied heavily on its physical showrooms and its proprietary website, selling its merchandise directly to its customers.
But, under Brad McCarthy, the new Chief Executive Officer who took the helm earlier this year, the company has committed to broadening its worldwide distribution efforts and reducing customer acquisition costs so it can become profitable again.
Peloton Interactive embarked on a restructuring plan worth $800 million when John Foley, the company’s founder relinquished his role as Chief Executive as losses kept on mounting and costs started becoming uncontrollable.
Since then, the company has been looking at a subscription approach for its merchandise, as another effective way of drumming up sales. The company also simplified its supply chain by exiting its in-house manufacturing efforts.
Kevin Cornils, the company’s Chief Commercial Officer, said:
Post-Covid, the retail environment — online and in stores — is continuing to evolve, and that’s something that we’re trying to understand better to make sure the Peloton of the future is calibrated appropriately for that. We want to make it as easy as possible to get a Peloton.