Today, the company generates the bulk of its revenue from personal fitness devices such as smartwatches, fitness trackers, cycling power meters, and heart rate monitors. Garmin ( NASDAQ:GRMN) started by manufacturing global positioning system (GPS) navigation devices for automobiles. While the product will likely continue to be a drag on profits for the next few years, successfully scaling this connected fitness offering to millions of subscribers will produce plenty of long-term recurring revenue for the company.
This $1,500 home gym device requires a $40-per-month subscription, and Lululemon is uniquely positioned to leverage its retail stores to drive sales of the service. The company also moved into the connected fitness space with its 2020 acquisition of Mirror.
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Lululemon’s brick-and-mortar retail operations are once again operating at full capacity, and the number of Lululemon stores is increasing. Management is expecting to increase the company's 2021 revenue to more than $6 billion - up from $4 billion in 2019 - representing an acceleration from pre-pandemic growth rates. In 2020, the company, which is best known for its yoga pants and accessories, successfully generated more sales from e-commerce. While many apparel retailers have struggled during the pandemic, Lululemon Athletica ( NASDAQ:LULU) managed to expand its sales and gross margin. If management meets its subscriber goals, Nautilus’ revenue split between equipment and subscriptions would be on par with rival Peloton. It expects to reach 250,000 subscribers by the end of fiscal 2022 and 2 million by the end of 2026, at which point connected fitness will likely account for about 20% of the company’s revenue.Īlthough Nautilus’ brands allow it to operate with strong margins and produce a profit, connected fitness represents a significant opportunity for the small-cap stock to generate attractive, reliable profits on a long-term basis. Nautilus, which is focused on connected fitness, launched its JRNY digital subscription product at the end of 2019. The company also benefited from the pandemic, posting record highs in revenue and nearly doubling its year-over-year sales in 2020. Nautilus ( NYSE:NLS) is the owner of well-known home gym equipment brands such as Bowflex, Schwinn, and its namesake Nautilus brand. Meanwhile, the company is raising the price on its equipment through additional fees for delivery and setup. CEO John Foley rebutted the report, claiming that it lacked context, but he did say that Peloton is looking to “right-size” production levels and staffing, cutting costs where it can. But, as the pandemic subsides and gyms reopen, the company hasn’t maintained its pace of growth.Īfter it couldn’t keep up with demand in 2020, Peloton planned to halt production on equipment in early 2022, according to an internal company memo seen by reporters. The home gym company thrived during the pandemic since most people were confined to their homes. Digital subscriptions are immensely profitable for Peloton, which has a gross margin of more than 60%. Nearly 1 million more pay $13 per month for the digital-only subscription. Peloton has more than 2 million subscribers who pay $40 per month for a connected fitness subscription. Although users must purchase Peloton equipment, the company earns most of its revenue from the subscriptions required to fully utilize its bikes and treadmills. Peloton ( NASDAQ:PTON) is known for its connected stationary bikes and other home workout equipment. Profits are likely to increase as people start going back to the gym. After stronger-than-expected results in the summer of 2021, management raised its outlook for store openings. Planet Fitness is well positioned to capture market share after many of its competitors closed their doors permanently due to the coronavirus pandemic. The franchise business model results in a very high operating margin with low capital intensity. Most Planet Fitness locations are franchises, but the company also directly operates more than 100 facilities. alone, and the company has plenty of opportunity to expand internationally. Management has a long-term goal of reaching 4,000 locations in the U.S. Most Planet Fitness gyms are located in the U.S. With more than 2,000 locations, the company prides itself on being inclusive of all fitness levels. Planet Fitness ( NYSE:PLNT) operates a chain of ultra-low-cost gyms with monthly fees as low as $10.
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