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Peloton feels the burn as Americans head back to the gym

Shares slump more than 35 percent after the fitness equipment maker slashes its sales and subscriptions outlook

Peloton stationary bikes for sale at the company's showroom in Dedham, Mass on Feb. 3, 2021. Peloton's stock slumped 35.4 percent, to $55.64, after the company slashed nearly $1 billion off its revenue projections. (Bloomberg)

The pandemic created skyrocketing fortunes for a cadre of fitness-minded companies, and few benefited more from the stay-at-home era than Peloton.

But the underlying question — will it last? — was tested Friday in dramatic fashion as the company’s shares shed more than a third of their value amid diminishing sales and subscriptions forecasts.

The stock slumped 35.4 percent, to $55.64, after Peloton slashed nearly $1 billion off its revenue projections. It now expects $4.4 billion to $4.8 billion in sales for the year ending June 30, 2022. The maker of connected exercise equipment also tempered its profit outlook, and CNBC reported Friday that it had implemented a companywide hiring freeze.

When asked for comment, a Peloton spokesperson referred The Post to the company’s letter to shareholders.

Peloton’s slumping fortunes mark a broader return to a pre-pandemic way of life, analysts say, as hordes of isolation-weary Americans set aside their home-based workout routines and head back to the gym.

In August, the company cut 20 percent off the price of its signature Bike, to $1,495, but it hasn’t been enough to maintain the highflying sales of 2020.

“While the price drop led to conversion rates that exceeded our forecast, overall traffic has not met our initial expectation,” chief financial officer Jill Woodworth said in a call with investors Thursday.

For a variety of reasons, fewer people are working from home. Just 11.6 percent of workers older than 16 were teleworking as of October, according to the U.S. Bureau of Labor Statistics. That’s the lowest portion at any time during the pandemic, and a far cry from summer 2020, when roughly a third of employed adults teleworked.

As some analysts noted during Peloton’s epic run last year, homes can start to feel less like sanctuaries when people spend enough time in them, and are forced to do everything — eat, work and exercise — in their most intimate spaces. What might have felt like newfound convenience — hopping off a work call for a 30-minute spin session — can start to resemble a domestic trap.

“People in general are more social creatures,” said Joanna Zeng O’Brien, a senior Moody’s Investors Service analyst who covers the fitness industry. “They go to the gym for the energy, for the group classes. You can buy yourself a Peloton bike or treadmill, and work out in your basement or bedroom, but it’s a different experience.”

Sales of home fitness equipment in 2021 are still up about 100 percent over 2019, and roughly 20 percent over last year, according to sales figures maintained by NPD Group. But participation in Peloton’s online workouts fell by 36 percent in the six-month period that ended Sept. 30, according to user statistics reported by the company. Sales of the company’s connected stationary bikes are down, one contributor to a 17 percent year-over-year decline in revenue reported Thursday.

Large gym chains, meanwhile, say customers are coming back. On Thursday, Planet Fitness shares hit a record high after an executive said it is at roughly 97 percent of its pre-pandemic capacity.

Perhaps more worrying for investors was the lowered subscription outlook: Peloton now expects 3.35 million to 3.45 million users for its virtual workouts, instead of 3.63 million. The subscriptions for its treadmill and bike run $39 per month and cover a range of classes and exercise experiences.

The typical Peloton subscriber did 16.6 online workouts each month in the three-month period ending Sept. 30. That’s down from 26 per month in the first three months of 2021.

Even as Peloton ramped up its marketing spending, slashed the cost of its bike and built corporate wellness partnerships, a slowdown is to be expected after such staggering growth, said O’Brien.

Consumers also have more fitness apps and Internet-connected workout gear to choose from. Landon Luxembourg, a senior analyst at investment research firm Third Bridge Group said Peloton faces increased competition from tech giants like Apple — which released its own workout subscription service, Fitness+, built around the Apple Watch — and from other on-demand fitness companies that focus on strength training, like Tonal, the company behind the wall-mounted digital weight machine.

Analysts still believe the company’s line of stationary treadmills could provide it with new growth opportunities even as subscriptions trail off. But the company faces competition in that sector from NordicTrack which has sold home exercise equipment for years.

The return of retail gyms may lead some customers to second guess their pricey equipment purchases. But the new work-from-home and hybrid work environment are still shaping the fitness industry and consumer habits, Luxembourg said. Since many customers choose their gym based on their commute, and still need some of their own workout gear for the days they don’t go into the office, he sees a hybrid approach to fitness as another path.