To say the last few years have been a roller coaster for Peloton barely scratches the surface. Once flying high on exploding pandemic demand, the company has been confronted with what it has deemed a “significant reduction” in its connected fitness products, including a series of treadmills and bikes.
Following a presentation, internal documents noted by CNBC point to a two-month halt in the production of its entry-level Bike between February and March. The premium Bike+ has already been halted, with production only starting back up again in June, per the documents. Tread production is set for a six-week pause in February, while the Tread+ won’t be produced at all during the 2022 fiscal year.
Peloton was initially one of the biggest tech winners as gyms across the globe closed down amid the pandemic. In fact, it was initially faced with the opposite problem: a delivery system that simply couldn't meet the practically overnight spike in demand for its products. In May of last year, it announced that it was pumping $400 million into an Ohio factory to build its growing line of products.
The company has long been a leader in connected home fitness, and by most accounts viewed COVID-19 as more of a paradigm shift than temporary shift in how people work out. And while the pandemic has continued to stretch on, it has seen flagging sales as gyms have reopened and competition has increased through startups and big names like Samsung and Apple. Earlier this week, news broke that the company had hired consulting firm McKinsey in a bid to stem some of the financial bleeding -- a move expected to come with a restructuring and job loss. By the end of 2021, Peloton's stock plummeted 76%, following an astronomical rise a year prior.
In spite of those early successes, the past few years have been dotted with controversy -- most notably, a recall of its treadmill products over safety concerns. The company was initially hesitant to work with the Consumer Product Safety Commission on a recall following 70 safety incidents, including the death of a young child.
“From my perspective, as one of the founders, the framing of the category wasn’t good enough. What the category thought of as safety wasn’t good enough,” CEO Foley told me at Disrupt late last year. “We thought, let’s bring treads to market, and from a hardware perspective, they’re the best designed treads. Looking at the safety that’s been in the category for decades, what we learned is, we need to be better. We’re better in almost everything, and now we need to be better in safety.”
Prior to the pandemic, the company was already well known for having attracted an almost cult-like following, thanks to its popular instructors and content plays. Though it's safe to say it overestimated its continued growth and flew too close to the sun with its continued spending -- at least for the short term. Late last year, it announced the Peloton Guide, a $495 connected strength system designed to lower the barrier of entry into its home fitness ecosystem. Additional products, including a rowing machine, were reportedly in the works as well.
No word on how today's news would impact the arrival of either, though significant restructuring at the company would almost certainly find it doing everything within its power to curb spending. Some of the company's chief competitors have been undergoing their own changes of late, as well. Earlier this month, Lululemon announced that it had appointed a new CEO for Mirror, after the surprise departure of the company's founder last September.
We’ve reached out to Peloton to confirm today’s reporting.