Peloton internal docs show it slashed 2022 sales goals for apparel

Peloton has slashed 2022 sales projections for its apparel business, according to internal documents obtained by CNBC. Momentum in the unit, which is run by Chief Executive John Foley’s wife, seems to be fading heading into the next year, after apparel revenue more than doubled to over $100 million from 2020 to 2021.

This internal look at Peloton’s apparel arm, though the division is a small fraction of the overall business, gives yet another glimpse into how the connected fitness company rode a wave of heightened demand in the midst of the Covid-19 pandemic. But that demand has started to normalize, and Peloton now has to reset.

In the fiscal year ended June 30, 2020, Peloton’s apparel business brought in roughly $41 million in revenue by selling 800,000 units, an internal presentation dated November 2021 shows. Peloton reported total revenue for the year of $1.8 billion.

In fiscal 2021, Peloton said in the presentation, it saw tremendous growth in apparel due to Covid-related comfort trends — so much so that it didn’t have enough supply to keep pace with demand. According to the presentation, it drew in $107 million in revenue, selling just under 2 million units of apparel. Peloton’s total revenue was $4 billion in the fiscal year ended June 30, 2021.

But for fiscal 2022, with five months left to go, the company may have been too optimistic, Peloton’s presentation suggests. Initially, Peloton had forecast that its apparel division would have more than $200 million in annual revenue, but now it expects to see closer to $150 million in apparel sales, saying multiple “macro factors,” including supply chain constraints, created challenges for the business, according to the presentation.

It’s unclear whether these revenue figures were audited or whether the 2022 projections have been adjusted since the date of the presentation.

A Peloton spokeswoman declined to comment, saying the company is in a quiet period ahead of the release of its earnings on Feb. 8.

The numbers offer some context for a segment that Peloton does not break out from its overall sales. Instead, apparel revenue is included in its connected fitness division, along with its Bikes and its treadmills, which it calls Treads. Apparel is also a segment where Peloton has ramped up investments in recent months, under Jill Foley’s supervision. Her role within the company has recently drawn criticism from an activist investor.

In an effort to build its own brand, Peloton cut ties with a number of national apparel brands it had worked with on its clothing line. Then, it pivoted to designing and manufacturing its own leggings, sports bras and sweatshirts in-house. It also started marketing the apparel line independently from its equipment line.  

John Foley told attendees at a Goldman Sachs conference Sept. 22 that the move would boost…