Apparently, Mr. Massive wasn’t the one one [redacted[ by Peloton in the past few weeks. According to paperwork obtained by CNBC, the $1.8B exercise equipment company was set to put a temporary stop on any further production.
Reportedly per CNBC, consumer hesitation due to increased competition, a slowdown in the demand of its gear, and a reduction in the pandemic-induced “workout-from-home” trend were cited as reasons for the decision.
However, CEO John Foley promptly issued a statement to shoot down any such rumors. “The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy,” he wrote. “It has saddened me to know you read these things without the clarity and context that you deserve. Before I go on, I want all of you to know that we have identified a leaker, and we are moving forward with the appropriate legal action.”
Peloton was not going to manufacture any more of its standard Bikes for the next two months, according to the documents, and it would also halt work on the line of Tread treadmills for six weeks as of February. The company has already paused production on its more expensive Bike+ last month, and it apparently would make no more through June 2022.
“As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company,” Foley said in a previous statement. “This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward.”
Peloton’s market cap plunged more than $10 billion last November due to poor market performance in 2022, which was not helped by the widespread recall of its treadmill in May. In fact, the company doesn’t expect to be back in the black until next year. Foley’s own net worth dropped by $376 million around the same time, according to Forbes.
Allegedly, the company also reached out to the consulting firm McKinsey in order to turn the ship around. The unnamed source told CNBC that layoffs, firings, and store closures are soon underway, and some staff from Peloton’s sales division have already been let go.
But Foley made sure to address this issue as well in his recent statement. “[W]e’ve stated layoffs could be absolutely the final lever we’d ever hope to tug,” he wrote in right now’s media launch. “Nonetheless, we now want to judge our group construction and dimension of our group, with the utmost care and compassion. And we’re nonetheless within the technique of contemplating all choices as a part of our efforts to make our enterprise extra versatile.”
Peloton was reportedly going to extend the margin on its merchandise, too. Per the leaked audio, the corporate deliberate to boost the costs of its gear whereas eliminating free supply and setup. The technique was meant to slash prices but increase Peloton’s backside line on the identical time. “It’s a part of a broader transfer inside the group,” chief industrial officer Kevin Cornils is claimed to have revealed. “We’re trying to get gross margin between 25 and 30% on our merchandise.”
The initiative was supposedly named “Mission Phoenix.”
However Foley has rebutted the entire matter as a farce with one quick header: Rumors that we’re halting all manufacturing of bikes and Treads are false.
Learn John Foley’s assertion about what the media has proper and mistaken relating to Peloton’s future by clicking right here.
