Peloton is temporarily halting production of its connected fitness products as consumer demand wanes and the company looks to control costs, CNBC reports, citing “internal documents.” The company said in a confidential presentation dated January 10th that demand for its connected fitness equipment has faced a “significant reduction” worldwide due to consumers’ price sensitivity and increased competitor activity.
Peloton plans to pause Bike production for two months, from February to March, the documents show. It already halted production of its more expensive Bike+ in December and will do so until June. It won’t manufacture its Tread treadmill machine for six weeks, beginning next month. And it doesn’t anticipate producing any Tread+ machines in fiscal 2022, according to the documents.
Peloton has essentially guessed wrong about how many people would be buying its products, after so much demand was pulled forward during the coronavirus pandemic. It’s now left with thousands of cycles and treadmills sitting in warehouses or on cargo ships, and it needs to reset its inventory levels.
The planned production halt comes as close to $40 billion has been shaved off of Peloton’s market cap over the past year. Its market value hit a high of nearly $50 billion last January.
Peloton shares closed Thursday down 23.9% at $24.22, bringing the stock’s market value to $7.9 billion.
CNBC reported on Tuesday that Peloton is working with consulting firm McKinsey & Co. to look for ways to slash costs, which could entail job cuts and store closures. A person familiar with the matter said Peloton has already started layoffs in its sales division.
MacDailyNews Take: Apple Fitness+, killer.
See also: Apple Fitness+ is killing Peloton – December 29, 2021
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