Peloton has reportedly halted the production of its bikes and treadmills due to poor demand for its connected home fitness machines. The premium brand ran hot and heavy during the coronavirus lockdown but has admitted a “significant reduction” in demand due to factors including competition and inflation.
CNBC reports that the connected fitness machine manufacturer Peloton has temporarily halted the production of its fitness products citing low consumer demand. The company is reportedly looking to control costs, Breitbart News recently reported that the company was increasing the price of its current Bike and Tread products claiming that the increase was due to inflation.
Peloton reportedly plans to pause Bike production for two months, from February to March. The company halted production of its Bike+ product in December and has no plans to resume production until June. The company stated in a confidential presentation on January 10 that demand for its connected fitness equipment has faced a “significant reduction,” due to inflation, increased competition, and shoppers’ price sensitivity.
Peloton appears to have incorrectly predicted the demand for its products after seeing a major spike in demand during the coronavirus pandemic. Now the company has thousands of exercise bicycles and treadmills sitting in warehouses without the demand from consumers to eagerly buy them.
Peloton shares were down 23.9 percent to $24.22 on Thursday at market close, bringing the market value of the stock to $7.9 billion. The company’s recent presentation shows that it had initially set predictions for demand and deliveries in the third and fourth quarter the turned out to be far too high.
Peloton also stated that email capture rates for the debut of its new $459 strength training product codenamed “Project Tiger” have been low. Email capture rates track the number of people who have signed up to receive extra information about a product. Peloton stated that this was a sign of “a more challenging post-Covid demand environment.”
Read more at CNBC here.