Peloton Interactive Inc. will delay the publication of its annual report, saying it needs more time to sort out accounting tied to the fitness company’s restructuring effort.
As part of a turnaround plan, Peloton recently shifted away from in-house deliveries and warehouses, opting to rely on partners instead. Accounting for those changes will prevent the company from delivering its 10-K report in a timely manner, Peloton said in a filing Monday.
Peloton said it needs more time to finish disclosures related to the fourth quarter, “including management’s assessment of the effectiveness of internal controls over financial reporting as it relates to its accounts and disclosures related to these strategic business developments.”
Adam Glanzman/Bloomberg
The company already delivered its fiscal fourth-quarter earnings report, including a forecast for the current quarter. That’s typically followed soon by the more in-depth 10-K filing. But management has determined that it won’t complete the necessary audit procedures with its accounting firm, Ernst & Young LLP, in time.
Investors took the delay in stride. The shares, down 70% this year through the close, were unchanged in late trading after the announcement.
The warehouse changes are part of an ambitious comeback effort by Peloton, which had thrived in the early days of the pandemic before sliding into a deep slump. The company has announced recent plans to outsource manufacturing to third-party factories, cut its customer service operations in half and lay off hundreds of workers.
It also began selling its bikes and accessories via Amazon.com Inc. for the first time, helping the company work through an inventory pile-up.
Last week, Peloton gave a bleak forecast for the current quarter, with losses piling up and sales falling more steeply than Wall Street expected. Revenue will be $625 million to $650 million in the period, far short of the $772 million analysts were predicting. Its loss on an adjusted basis will be $90 million to $115 million.
Chief Executive Officer Barry McCarthy acknowledged the company’s challenges in a letter to shareholders Thursday, but said he saw “significant progress driving our comeback and Peloton’s long-term resilience.” His goal is to make Peloton cash-flow positive in the second half of fiscal 2023.
— With assistance from Mark Gurman
