Peloton is reportedly suspending production of its indoor exercise bikes and treadmills amid a declining demand across the globe.
According to CNBC, the company recently announced during a confidential presentation on January 10 that global demand has seen a “significant reduction” due to consumer price sensitivity and in order to control costs, manufacturing for some of its sports equipment will be temporarily halted. The premium Bike+ model had already ceased production back in December last year and will continue through to June, while the standard Bike will be suspended for two months over February and March. After being recalled over safety issues last year, the Tread+ will not be produced at all during fiscal 2022.
The company’s position has vastly changed over the course of the pandemic. Last year, its value shot up to a record high of $50 billion USD, capitalizing on gym closures and social distancing regulations across the globe, which drove consumers to purchase more workout equipment for their homes. With restrictions slowly lifting, demand has quickly waned, and Peloton is now left with a significant amount of inventory but very little demand for its products.
“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” the company’s CEO John Foley wrote in a statement. “This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”
The company is now slated to report its fiscal second-quarter results on February 8 after the market closes.
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