Sunday December 04, 2022

Peloton’s woes continue as it temporarily halts bike, treadmill production

Peloton’s pandemic fortunes started to decline in 2021 and it seems that this trend will continue into the new year. CNBC has reported that Peloton has decided temporarily to stop production of its treadmills and connected exercise bikes due to weak consumer demand. Peloton stopped production of its premium Bike Plus in December, and it appears that they have no plans to resume production until at least June. Six weeks of production will be halted for the newer Peloton Tread, launched last year. Peloton also said that it does not plan to produce any Tread Plus machines during fiscal 2022. After several injuries and the death of a small child, the Consumer Product Safety Commission recalled Tread Plus machines.
The Peloton Guide is also in trouble. The Guide, which was announced in November, was a $495 camera-based strength-training system that connected to a user’s television and came with a heart rate armband and remote. CNBC cites internal documents that show the product has not received much interest from consumers. The Guide was originally expected to launch in early 2022. However, it seems that it might not launch until April.
The Verge reached out at Peloton for comment, but did not receive a reply immediately.
According to the connected fitness company, it is stopping production because it overestimated consumer demand and misjudged people’s desire to return for in-person classes. CEO John Foley acknowledged this fact during its November investor call. Peloton products are now in abundance, with no signs of another at-home fitness trend. It’s ironic that fate has chosen this ironic twist of fate. Peloton’s biggest problem in the early days of the pandemic was its inability to meet the skyrocketing demand. This led to months-long shipping delays, which the company spent millions to fix. Peloton also went on a huge spending spree when things were going well. The company spent $420 million in December 2020 to purchase Precor, a commercial fitness equipment manufacturer. The company then spent $400 million more to build a factory on Ohio.
Peloton’s troubles might seem like a warning sign for the connected fitness industry. However, many connected equipment manufacturers have taken Peloton’s lead. But connected fitness isn’t going anywhere. Experts predict that people will adopt a hybrid model where they work out at home and in the gym, much like remote work. Peloton is still the leader but is now facing increased competition from competitors like Tonal, Echelon and Hydrow.
The bigger question is how Peloton will adapt to the new post-pandemic reality. The next earnings call for Peloton is scheduled for February 8, but the results of last quarter are concerning. Peloton lost $376 million last quarter, despite keeping 92 percent of its annual subscribers. Peloton’s August attempt to reduce the price of its original Peloton Bike by $400 didn’t seem like it would have an impact on the demand. CNBC reported earlier this week that Peloton was working in conjunction with a consulting company to cut jobs and “review” its cost structure, as well as increase delivery and assembly fees for its treadmills and bikes.

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