TLDR:
- Peloton and Costco partnering to sell Bike+ in 300 U.S. stores from Nov 1, 2024 to Feb 15, 2025
- Special pricing: $1,999 in-store, $2,199 online (vs $2,495 on Peloton website)
- First seasonal retail collaboration for Peloton in the U.S.
- Costco stock receives “Outperform” rating from Bernstein with $1,016 price target
- Costco shares up 34% in 2024, trading at 50x next year’s earnings
Costco Wholesale Corporation is set to introduce Peloton Bike+ across 300 U.S. locations and its online platform during the upcoming holiday season, marking a significant retail collaboration between the two companies.
Starting November 1, 2024, Costco members will have access to specially priced Peloton Bike+ units at $1,999 in-store and $2,199 online, including delivery. These prices represent substantial savings compared to the $2,495 price tag on Peloton’s website. The offer includes a 48-month extended warranty and will run through February 15, 2025, or while supplies last.
The Bike+ model features advanced capabilities including a rotating screen and an auto-resistance function that synchronizes with instructor cues during workouts. Users will need to subscribe to Peloton’s All-Access Membership, priced at $44 monthly, to access the platform’s content library spanning 16 workout categories.
For Peloton, this partnership represents its first seasonal retail collaboration in the United States, providing access to Costco’s substantial membership base of 136 million people. The move follows Peloton’s earlier expansion into wholesale through Amazon in 2022, marking a shift from its traditional direct-to-consumer model.
Dion Camp Sanders, Peloton’s chief emerging business officer, expressed enthusiasm about the collaboration, noting,
“The Costco brand is incredibly powerful and respected in the U.S. and abroad. Costco members know they are shopping for high-quality products from trusted brands with the best value.”
The partnership announcement coincides with new analyst coverage of Costco stock. Bernstein Research analyst Zhihan Ma initiated coverage with an Outperform rating and a price target of $1,016, suggesting a 15% upside potential.
Costco’s stock has shown strong performance in 2024, gaining 34% year-to-date. As of recent trading, shares were priced at $886.39.
Ma’s analysis highlights Costco’s appeal to value-conscious consumers, particularly in grocery items. The company’s no-frills warehouse model has proven more productive than traditional retail approaches, while its diverse product mix, including the popular Kirkland private label, maintains customer loyalty.
The analyst projects Costco’s long-term net sales to grow at high single-digit rates, driven by consistent store traffic and expansion plans both domestically and internationally. Ma identified 45 potential markets for future warehouse locations.
Despite trading at approximately 50 times next year’s earnings, well above the industry average of 14 times, Ma believes Costco’s consistent performance justifies its valuation.
However, the analyst notes that Costco has been slower than competitors in developing its e-commerce capabilities, though recent management initiatives show promising results in this area.
Peloton’s latest financial reports show flat revenue in its most recent quarter, with full fiscal year revenue declining 3.6% year-over-year to $2.7 billion.
The exercise equipment manufacturer recently implemented price adjustments across select markets and has been working to broaden its market perception beyond being primarily a bike company.
The collaboration is scheduled to begin as the holiday shopping season approaches, with Costco offering the Bike+ both in-store and through its online platform.
For the duration of the promotion, Costco members will have exclusive access to this specially priced bundle, representing one of the most competitive offers in the market for Peloton’s premium exercise equipment.
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