Daily Crunch: Peloton finances revealed - TechCrunch

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1. Peloton files publicly for IPO

Peloton previously filed a confidential S-1, but now its IPO documents have been revealed publicly, showing that the fitness tech company brought in $915 million in revenue during its most recent fiscal year, with losses of $245.7 million.

Co-founder and CEO John Foley laid out a grand vision in the documents, writing that “Peloton is so much more than a Bike — we believe we have the opportunity to create one of the most innovative global technology platforms of our time.”

2. Anthony Levandowski, former Google engineer at center of Waymo-Uber case, charged with stealing trade secrets

If convicted, Levandowski faces a maximum sentence of 10 years and a fine of $250,000 — plus restitution — for each violation, according to the U.S. Attorney’s office.

3. Fitbit’s CEO discusses the company’s subscription future

At a small event in Manhattan this week, Fitbit laid out its future for the press. Tellingly, the event was far more focused on the company’s software play. (Extra Crunch membership required.)

Image via Getty Images /
franckreporter

4. US border officials are increasingly denying entry to travelers over others’ social media

The latest case saw a Palestinian national living in Lebanon and would-be Harvard freshman denied entry to the U.S. just before the start of the school year.

5. ThoughtSpot hauls in $248M Series E on $1.95B valuation

ThoughtSpot was started by a bunch of ex-Googlers looking to bring the power of search to data. Seven years later the company is growing fast, sporting a valuation of almost $2 billion and looking ahead to a possible IPO.

6. Google will shut down Google Hire in 2020

Google built Hire in an effort to simplify the hiring process, with a workflow that integrated into Google’s G Suite things like searching for applicants, scheduling interviews and providing feedback about potential hires.

7. Rwanda to phase out gas motorcycle taxis for e-motos

The government of Rwanda will soon issue national policy guidelines to eliminate gas motorcycles in its taxi sector in favor of e-motos.

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https://techcrunch.com/2019/08/28/daily-crunch-peloton-finances-revealed/

2019-08-28 18:09:52Z
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Peloton Is a Phenomenon. Can It Last? - The New York Times

As far as indoor cycling machines go, the $2,245 Peloton bike is nothing special. It has a sleek black and red frame. It has a big screen. It’s on Wi-Fi.

But a combination of aspirational infomercials (“This … is fitness evolved.”) and streaming classes taught by glamorous instructors has led Peloton to sell 577,000 of its bikes and treadmills in five years. Richard Branson is a fan. So are Jimmy Fallon, Kate Hudson and the Obamas.

Now as Peloton prepares to go public, the New York City-based company — which investors have privately valued at $4 billion — is facing questions about how long it can stay on top. Fitness is a historically faddish category. Exercise manias, from the Thighmaster to Tae Bo, have all come and gone. SoulCycle pulled its initial public offering entirely.

For Peloton, some troublesome signs have emerged. The company’s losses have more than quadrupled in the last year. It is embroiled in legal fights over music and patents. Competitors and copycats are moving in aggressively. And the boutique spinning craze has started to wane.

“Consumer fitness for at-home use has been through any number of cycles, going back to the 1990s when you had the ab roller,” said Michael Swartz, an analyst with SunTrust Robinson Humphrey.

Peloton, which made its offering prospectus public on Tuesday, declined to comment ahead of the I.P.O. In an interview last year, William Lynch, Peloton’s president, said the company had studied the fitness market’s “baggage” and determined that past crazes failed because they pushed empty claims about results.

Peloton, he said, is focused on bringing “serious fitness” into people’s homes in a “fresh and relevant” way with its growing library of classes. “We think if we do that, our members are going to stay with us,” he said.

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John Foley, a tech executive, founded Peloton in 2012.CreditJeenah Moon for The New York Times

Stage Race

Peloton was started, naturally, by a spin devotee.

John Foley, a tech executive who previously ran Barnes & Noble’s e-commerce business, founded Peloton in 2012 and became its chief executive. He was a fan of spin studios like SoulCycle and Flywheel, which became popular for their pumping music, camaraderie and energetic instructors.

But as a parent of two children, he found it difficult to get to spin class. So he created Peloton to bring SoulCycle’s vibe into people’s homes.

Mr. Foley, now 48, initially struggled to attract venture capital funding. For investors, scars lingered from Fitbit, the fitness tracking company that rode a wave of hype but stumbled under competition from Apple and Samsung.

“People were asking, ‘As an expensive hardware play, how big could that be?’” said Hans Tung, an investor at the venture capital firm GGV, which invested in Peloton last year.

In 2014, Peloton began shipping its internet-connected stationary bikes with a screen attached, charging $39 a month for access to streaming classes. Mr. Foley opened showrooms in shopping centers around the country, where people could test the bikes and the streaming classes.

Vicki Reed, a former head of marketing at Peloton who left in 2016, calls Peloton’s classes “exertainment,” meaning they are so engaging they distract people from what they’re doing.

“They were smart enough to grab it and go with it,” she said.

Sales quickly soared. Peloton’s spin instructors became stars, snagging endorsement deals and amassing social media followings. Lively online communities of riders sprang up, with people applauding one another’s workouts, gossiping about instructors and sharing fitness tips.

Jed Katz, a managing partner at Javelin Venture Partners who personally invested in Peloton in 2012, said he was surprised that a workout bike could “go viral so fast.” Peloton “became a ‘have to have’ product,” he said.

Crystal O’Keefe, 41, a Peloton owner in St. Louis, said she had made so many new friends through Peloton that she travels to New York several times a year for meet-ups. “It’s just a whole new family,” she said.

In its prospectus on Tuesday, Peloton revealed it lost $195.6 million in the fiscal year that ended June 30, compared with a loss of $47.9 million a year ago. Revenue rose to $915 million from $435 million over that same period.

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Peloton has sold 577,000 of its bikes and treadmills in five years.CreditRoger Kisby for The New York Times

New Competition

There are now at least a dozen rivals that sell Peloton-style “studio” bikes for as little as $199.

A brand called Echelon, which has raised funding from the investment firm of Jay Galluzzo, a co-founder of Flywheel, offers a blatant knockoff, down to a round black logo, for $899.99. Lou Lentine, president of Echelon Fitness Multimedia, acknowledged the similarities with Peloton but said Echelon’s models were more affordable.

In August, Equinox, the parent company of SoulCycle, also announced plans for its own streaming indoor cycling and treadmill classes.

And Icon Health & Fitness, which owns NordicTrack and ProForm, sells internet-connected bikes with $15 and $39 monthly subscriptions for digital classes called iFit. NordicTrack’s bikes and treadmills, which automatically adjust speed and incline as part of its workouts, incorporate more technology than Peloton’s, said Colleen Logan, vice president for marketing.

“Theirs is really like an old-fashioned spin bike. You just, rrr, rrr, twist it with your fingers,” she said.

Icon is increasingly orienting itself around Peloton-style digital subscriptions. The 42-year-old company expects to one day make more revenue from streaming classes than from workout equipment, said Chase Watterson, iFit’s head of marketing. The digital classes now have 287,436 subscribers.

Other start-ups are mimicking Peloton’s model of combining different kinds of fitness equipment with a monthly streaming subscription. The start-ups Hydrow and Crew are the “Pelotons of rowing,” FightCamp is “Peloton for boxing,” and Mirror offers workouts on an internet-connected mirror. The companies have raised more than $160 million in funding.

“You name the sport and someone is trying to be the Peloton of that,” Mr. Katz said. The “Pelotons of X” even have their own copycats: Echelon sells a Mirror-like product called “Echelon Reflect.”

Last year, Peloton sued Flywheel, which introduced a competing stationary bike and streaming service, accusing it of violating patents it holds for technology on its bike. The lawsuit has yet to be resolved.

David Chene, a managing partner at Flywheel’s owner, Kennedy Lewis Investment Management, said Peloton “failed to disclose” its pending litigation, noting that the Patent Trial and Appeal Board stated that Flywheel has a “reasonable likelihood of prevailing” in its arguments against three of Peloton’s patents.

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Peloton’s classes are “exertainment,” said a former company executive, meaning they are so engaging they distract people from what they’re doing. CreditDolly Faibyshev for The New York Times

Spin Fatigue

Bright-burning trends fade quickly. And spinning is not as hot as it was when Peloton got started.

In February, Randal Konik, an analyst with Jefferies, said an oversupply of spin studios in American cities had led some companies to reduce their prices. SoulCycle pulled its I.P.O. plans last year, citing market conditions. (The company declined to comment.) In May, Flywheel was taken over by creditors amid Peloton’s lawsuit over patent infringement.

To keep people from losing interest, Peloton has expanded into other areas, including a treadmill it began selling in 2018 for $3,995.

Last year, Peloton also offered subscriptions to digital classes for exercises like high-intensity interval training, barre, yoga, boot camp and meditation — no bike or treadmill required — for $19.49. It’s a bet that once someone enters the Peloton “ecosystem,” they will stay there for all their workouts. The company counts 102,000 digital-only subscriptions.

It’s hard to know just how many of its subscribers will stick with it. The company reported that less than 1 percent of its subscribers canceled each month on average. But half of its 511,000 subscribers have joined in the last year.

In the end, Mr. Tung said, “there are going to be copycats here and elsewhere, so it comes down to who can execute faster.”

For now, Peloton is in favor. The company can keep riding larger trends, like the boom in fitness spending and the popularity of social workouts, said Mr. Swartz of SunTrust Robinson Humphrey. Spinning may not be as hot as it was, but he said it “still has legs.”

That includes with Paul Gerhardt, 32, a tech entrepreneur in Oakland, Calif. He belongs to a group of 35,000 Peloton riders who do a rigorous style of classes called “Power Zone.” His bike is the first thing he sees when he starts his day and when he arrives home from work.

“Would I rather have the Peloton or Netflix?” he said. “I would rather have the Peloton.”

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https://www.nytimes.com/2019/08/28/technology/peloton-ipo.html

2019-08-28 16:10:00Z
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Lord & Taylor sold - Chain Store Age

REAL ESTATE

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The nation’s oldest department store company is being acquired by an apparel rental service that was founded some seven years ago.

Hudson’s Bay Company said it will sell Lord & Taylor to Le Tote for $100 million. The Canadian department store giant will be paid C$99.5 million (US$75 million) in cash after the deal closes and a secured promissory note of C$33.2 million (US$25 million) payable in cash after two years. In addition, Hudson’s Bay will receive an equity stake in Le Tote, two seats on its board and certain rights as a minority shareholder.

Under the terms of the agreement, Le Tote will acquire the Lord & Taylor brand and related intellectual property while assuming operations of the retailer’s 38 stores, digital channels and the associated inventory.

Hudson’s Bay and HBS Global Properties, the company’s real estate joint venture, will retain ownership of all the owned and ground-leased real estate assets related to Lord & Taylor. For at least the initial three years, Hudson’s Bay will maintain economic responsibility for the rent payments owed by Lord & Taylor at the locations operated by Le Tote. Starting in 2021, Hudson’s Bay and Le Tote will have options to reassess the Lord & Taylor store network

In May, Hudson’s Bay announced it was reviewing strategic alternatives for its Lord & Taylor division, including a possible sale or merger. Lord & Taylor accounted for about $1.4 billion of Hudson’s Bay’s $9.4 billion in retail sales in 2018.

“We’re excited to have reached an agreement with Le Tote that creates a new model for Lord & Taylor, bringing together fashion rental subscriptions with traditional retail,” said Helena Foulkes, CEO, Hudson Bay’s. “Following an extensive review of strategic alternatives, Le Tote’s leadership and innovative approach is the best path forward for Lord & Taylor, its loyal customers and dedicated associates. For HBC, this transaction builds upon our previous bold actions, further enabling us to focus on our greatest opportunities, Saks Fifth Avenue and Hudson’s Bay.”

Founded in 2012, Le Tote is a fashion subscription service that lets women rent clothing and accessories for a flat monthly fee. Members choose the items they want to wear and can keep them as long as they like. They also have the option to purchase items at a discount

“Since founding Le Tote, it’s been our mission to push the boundaries of retail,” said Rakesh Tondon, founder and CEO, Le Tote. “We’re excited to bring Le Tote together with Lord & Taylor, a storied brand that has stood for quality, style and service for nearly two centuries. With this acquisition, we continue our journey in creating the future of retail.”

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https://www.chainstoreage.com/real-estate/lord-taylor-sold/

2019-08-28 14:05:31Z
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Lowe's executive apologizes for derogatory comment about Hispanics - CNN

"This is perfect for them. Lifetime warranty on this. What else could you want?" said Joe McFarland, Lowe's (LOW) executive vice president of stores, in a corporate video broadcast to store employees Monday. The Washington Post first reported on the video.

McFarland apologized after employees criticized his comments online, saying they were offensive.

"I am sorry for a careless and ignorant comment I made during an associate broadcast yesterday," he said in a company-issued statement, adding that he took full responsibility and will be "spending time in the coming days and weeks with our associates, customers and business leaders to learn and grow from this moment."

McFarland joined Lowe's last year from JCPenney (JCP), where he oversaw that company's stores, operations and merchandise strategies. He previously worked at Home Depot (HD).

Lowe's did not say whether he would face any consequences consequences for the comments.

The company operates more than 1,700 stores in the United States. As of February 1, it employed approximately 190,000 full-time and 110,000 part-time workers in the United States, Canada and Mexico. Earlier this month, Lowe's said it would lay off thousands of workers, including assemblers who put together items like grills and patio furniture. It will also cut maintenance and facility-service jobs, such as janitors, and outsource those positions to third-party companies.

Correction: An earlier version of this story misstated which company had said earlier this month that it was cutting jobs.

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https://www.cnn.com/2019/08/27/business/lowes-executive-hispanic-comments/index.html

2019-08-27 21:40:00Z
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Beyond Meat Testing Fake Chicken at KFC - Bloomberg Markets and Finance

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2019-08-26 19:57:02Z
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Starbucks is adding a new pumpkin spice drink to its fall menu - CNN

Beginning Tuesday it will sell a Pumpkin Cream Cold Brew drink for the first time. That's in addition to the hot Pumpkin Spice Latte, which has attracted a cult following for the company.

The new "deliciously fall" drink combines pumpkin spice flavoring and cold brew coffee, the company said. It's topped with pumpkin cream cold foam and a dusting of pumpkin spice topping. Prices start at $4.45 for a grande, but vary depending on location.

Cold drinks are growing in popularity for Starbucks. They made up more than half of the company's sales last year — a 13% increase from 2013, it said. In its most recent earnings, Starbucks credited cold drinks, like cold brew coffees, for bolstering its bottom line and helping to kickstart sales in the afternoon, which previously has been a sore spot for the company.

The new cold brew drinks could also attract more health-conscious customers. A 16 oz Pumpkin Cream Cold Brew has 250 calories and 31 grams of sugar, while a same-size hot Pumpkin Spice Latte has 380 calories and 50 grams of sugar.

In addition to the two drinks, Starbucks (SBUX) on Tuesday is bringing back the Salted Caramel Mocha and pumpkin-flavored baked items, including a pumpkin scone and a pumpkin cream cheese muffin.

The pumpkin spice craze isn't slowing down. Sales for pumpkin-flavored items increased nearly 5% in 2018 to $511.5 million, according to new data from Nielsen provided to CNN Busines

Starbucks' new cold options also land at a time when pumpkin spice season seemingly starts earlier every year and the weather is still hot. The company told CNN Business that "PSL" season is only beginning a day earlier compared to last year.

Rival Dunkin' (DNKN) launched their fall menu in mid-August. This year, Dunkin' added apple cider-flavored donuts and a new Cinnamon Sugar Pumpkin Signature Latte.

Correction: A previous version of this story incorrectly identified the type of beverage Starbucks is offering. It also misstated Starbucks' sales figures.

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https://www.cnn.com/2019/08/26/business/starbucks-cold-brew-pumpkin-spice-latte/index.html

2019-08-26 10:31:00Z
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China trade war: Liu He calls for calm after Trump comments - Axios

Photo: Nicholas Kamm/AFP/Getty Images

President Trump said Monday China has requested for trade talks to resume.

Details: His comments came after China's economy czar, Vice Premier Liu He, said the Chinese government is willing to negotiate with the United States in a calm manner to resolve trade issues, Reuters reports.

We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war."

— Vice Premier Liu He comments, translated by Reuters

Driving the news: President Trump said Friday he would raise tariffs against China, hours after the Chinese government announced it would levy retaliatory duties on earlier U.S. action.

• Trump ramped up tensions at the G7 summit in France on Sunday, telling reporters that he had "no plans right now" to follow through on his emergency declaration threat to force U.S. companies to leave China but added, "If I want, I could declare a national emergency."
• And after telling reporters that he "might as well" have "second thoughts" about escalating the trade war, White House press secretary Stephanie Grisham clarified that Trump "regrets not raising the tariffs higher."

The big picture: China had vowed to continue fighting the trade war "until the end." But Reuters reports that Liu said at a tech conference in southwest Chongqing, "We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world."

Editor's note: This article has been updated with new details throughout.

Go deeper:

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https://www.axios.com/china-trade-war-liu-he-calls-for-calm-resolution-after-trump-remarks-bc491d9d-0a4f-4be6-b478-a0c5934ee2a4.html

2019-08-26 05:43:00Z
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