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Physical retail stores are 'vital' to Peloton as it prepares for an IPO

Brian Sozzi

Don’t tell the executives at Peloton that retail stores are dead.

The maker of $2,300 connected spin bikes and $4,300-plus connected treadmills now has 60 showrooms open globally. It reportedly has plans to open 100 more of these retail shops in 2019. The physical store push by Peloton into malls and street-level locations comes as numerous retailers shutter physical stores in droves.

But opening physical stores is vital for a digital first brand that has built its name on selling sleek fitness bikes and $39 a month membership passes for people to work out from home.

Peloton uses these showrooms — which are outfitted with its various connected hardware — as places to teach prospective buyers about the equipment and services platform. The business is apparently doing so well that retail made up roughly 30% of Peloton’s $800 million in sales in 2018, Peloton president William Lynch told Yahoo Finance in a recent interview.

“Retail is enormously strategic for us,” Lynch said. “We are huge believers in retail.” Peloton is fresh off opening its first international showroom in London. Adds Lynch, “We are going global with retail.”

Convincing investors that it could be successful with retail stores will prove vital as Peloton likely heads onto the road soon to pitch its IPO. If it wants a top valuation, Peloton (execs have said numerous times it’s profitable) must show it has multiple ways to capture new customers and retain existing ones.

And a roadshow could be about to kick off real soon.

Peloton has reportedly chosen JPMorgan and Goldman Sachs to lead its IPO. The company could be worth about $8 billion in an IPO, significantly above the $4.15 billion valuation it fetched during its last funding round in 2018.

Brian Sozzi is an editor-at-large at Yahoo Finance. Follow him on Twitter @BrianSozzi

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