Peloton’s chief executive has said the company is reviewing the size of its workforce and “resetting” production levels following a report that it was temporarily halting production of connected fitness bikes and treadmills after a significant drop in demand.
Shares in the exercise bike maker, once a pandemic darling, closed down 24 per cent on Thursday at about $24, wiping off nearly $2.5 billion in market value.
"We now need to evaluate our organisation structure and size of our team," chief executive John Foley said. "And we are still in the process of considering all options ... to make our business more flexible."
According to the CNBC report, Peloton, in a confidential presentation dated January 10th, said it had seen a "significant reduction" in demand, and that it planned to pause bike production in February and March. It also won't manufacture the Tread treadmill machine for six weeks, beginning next month.
“Rumours that we are halting all production of bikes and Treads are false,” Mr Foley said.
Peloton earlier in the day said it was taking “significant corrective actions” to improve its profitability and estimated second-quarter revenue to be about $1.14 billion, compared with its previous forecast of $1.1 billion to $1.2 billion.
The company has seen a slump in demand for its fitness classes and equipment as people venture out of their houses to hit gyms again following gradual easing of pandemic-related curbs.
"During the pandemic there was too little supply to meet the growing demand. Unfortunately the company took those cues to bulk up supply just as demand began to falter," said BMO Capital Markets analyst Simeon Siegel.
Peloton has been working with consulting firm McKinsey for a review of its cost structure and could cut jobs, CNBC reported earlier this week.
– Reuters
