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Peloton reportedly pauses production of bikes and treadmills following a 'significant reduction' in demand

Jan 21, 2022, 02:27 IST
Business Insider
John Smith/VIEWpress
  • Peloton is pausing the production of its bike and treadmill products, according to CNBC.
  • An internal presentation obtained by CNBC cited a "significant reduction" in global demand.
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Peloton is pausing the production of its connected fitness products, including its flagship stationary bike and treadmill, citing a "significant reduction" in global demand, according to internal documents obtained by CNBC.

The company's stock dropped 16% following the news before trading was halted. After trading resumed, the stock was down as much as 24%.

"Our warehouse was unsafely packed really for months," one employee, who requested anonymity to speak freely, told Insider. "I guarantee it's still completely packed to this day. From the day they recalled the Tread, like complete OSHA violations, complete safety violations. Like it's just crazy."

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Peloton did not immediately respond to Insider's request for comment on this story.

Production of the entry-level Bike will be suspended for February and March, the report said, while the basic Tread will be paused for six weeks starting next month. The company previously paused production of its most expensive Bike+ in December, and does not plan to make any Tread+ units in all of fiscal year 2022, CNBC reported.

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The news comes a day after Insider reported that Peloton execs were hoping to boost profits with a plan they called "Project Phoenix," which would raise prices of the firm's internet-connected exercise equipment and do away with free delivery.

"We were operating at a low general margin on Bike and a negative gross margin on Tread," Peloton's chief commercial officer, Kevin Cornils, said in leaked audio heard by Insider. "The reality is the business itself is not a healthy business without some of those increases."

Raising prices isn't a "whim," he said, but a "business necessity."

"The price cut didn't work as they expected," the anonymous employee told Insider. "Our margins are really horrible now and they're going down."

Are you a customer or employee of Peloton? Get in touch with these reporters via email or via Signal at 1-347-829-5826 using a non-work device.

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