Photo by Ezra Shaw/Getty Images
While most companies struggled early in the pandemic, Peloton was increasing its forecasts. Now, the connected-fitness pioneer is doing the opposite.
In its Q4 earnings call, the company posted a $313.2m loss, and a lower-than-expected forecast for Q1 2022.
So what happened?
The trouble started with delivery delays
After the pandemic forced many gyms and fitness centers to shut their doors, Peloton saw a flurry of orders that they weren’t prepared for.
While Peloton has been called a cult for its devoted customers, the shipping delays sparked the 1st crack in its reputation. At the height of the delays:
- 10k people joined a Facebook group dedicated to Peloton delivery problems
- 1.1k complaints were registered through the Better Business Bureau
Customers frequently complained that delivery of their new bikes would be canceled and rescheduled far in the future.
Peloton took the issue seriously and invested $100m+ to expedite deliveries.
Then came the treadmill recall
In May, Peloton recalled its Tread and Tread+ machines after reports of numerous injuries and a child’s death.
The company also offered full refunds to any customers who wanted to return their treadmill — and more customers took advantage than the company expected, doing damage to the balance sheet.
Now, the company is cutting prices to drive customer acquisition
The company announced plans to lower the price on both its signature bike and treadmill:
- The Bike will drop from ~$1.9k to ~$1.5k (though the Bike+ will hold at ~$2.5k)
- The Tread will sell for ~$2.5k compared to the original Tread+, (which sold for ~$4.3k)
Peloton CEO John Foley believes the Tread will outsell bikes by 2x-3x, and a recent report suggests the company is working on a connected rower as well.
If Peloton can keep both products safe, and figure out its delivery woes, we may just be looking at a momentary blip.
