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Peloton took $182 million impairment charge last quarter as inventories piled up

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Peloton’s stationary bicycle for sale in Dedham (Massachusetts), U.S.A on Wednesday February 3, 2021

Getty Images| Bloomberg | Getty Images

PelotonAs inventory rose and consumers drew back on its treadmills and bikes,’s goodwill suffered a $182million loss in the previous quarter.

Peloton identified a number of factors in the 3-month period that ended March 31, which indicated an “triggering event” to impose an impairment charge. the company said in a Tuesday 10-Q filing with the Securities and Exchange Commission. This charge was directly related to fitness products.

Peloton stated in the filing that these factors included a softening of demand, increased inventory costs and logistics, and a steady decline in stock prices. Market cap for the company has declined to approximately $4.5 Billion from its peak at $50 billion earlier last year.

Peloton lost $757.1 million in its latest quarter, up from $8.6 million one year ago. the company reported on Tuesday morning.

Peloton recorded a 24% drop in sales to $964.3million, which is the first decline in year-over-year revenues since its public listing in 2019.

Peloton, which is now run by Chief Executive Officer Barry McCarthy, offered up a weaker-than-anticipated outlook for its current quarter that ends on June 1, saying that demand could continue to be soft in the near term.

Peloton saw its inventories grow significantly as demand fell from the pandemic peak. They now total $1.4 Billion on the company’s balance sheets, up from $937.1 M a year ago. Peloton stated in its 10-Q filing that almost all of it was made up finished products, which are currently in storage or waiting to be delivered by the company.

CNBC reported late in January that Peloton was planning to temporarily halt production of some of its equipment in order to reset inventory levels. John Foley, then-CEO and cofounder of Peloton, responded that Peloton required to be. “right-size” production levels.

McCarthy, Peloton’s new CEO, stated Tuesday that Peloton isn’t making “quite enough progress in right-sizing its production” as it should.

Andrew Rendich now leads the supply chain team at the company. Rendich said that they had worked closely with their partners in order to place parts with long lead times.

Peloton was able to reduce its third-party supplier commitments from $550 million to $120 million to $280 million by Dec. 31.

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