- Peloton is suspending production of its bicycle and treadmill products, according to CNBC.
- An internal presentation obtained by CNBC cited a “significant reduction” in global demand.
- An employee told Insider that the company’s warehouses were “unsafely packed” with recalled treadmills.
Peloton suspends 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.
Shares of the company fell 16% after the news before trading halted. After trading resumed, the stock lost as much as 24%.
“Our warehouse has been unsafely packed for months,” one employee, who requested anonymity to speak freely, told Insider. “I guarantee you it’s still completely filled to this day. From the day they recalled the Tread, like complete OSHA violations, complete safety violations. Like that’s just crazy.”
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, according to the report, while the base tread will be suspended for six weeks from next month. The company previously halted production of its most expensive Bike+ in December and does not plan to manufacture Tread+ units in fiscal 2022, CNBC reported.
The news comes a day after Insider reported that Peloton executives were hoping to boost profits with a plan they called “Project Phoenix,” which would raise prices for the company’s internet-connected exercise equipment and remove free delivery.
“We were operating with a low overall margin on Bike and a negative gross margin on Tread,” Peloton chief commercial officer Kevin Cornils said in leaked audio heard by Insider. “The reality is that the business itself isn’t a healthy business without some of those raises.”
Raising prices is not a “whim”, he said, but a “business necessity”.
“The price drop didn’t work out as expected,” the anonymous employee told Insider. “Our margins are really awful now and they’re shrinking.”
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