Ahead of the company’s upcoming earnings, Peloton CEO John Foley paused in a “period of silence” to respond to a number of reports related to poor device sales. The executive denied that the company is halting production on its entire range of bikes and treadmills as demand for the machines began to slump amid gym reopenings.
Under the headline “Rumours that we are ceasing all bicycle and tread production are false,” Foley writes:
[W]We found ourselves in the middle of a once-in-a-hundred-year event with the COVID-19 pandemic, and what we predicted would happen in three years happened in months. in 2020 and 2021.
We worked quickly and diligently to meet demand at a time when the world really needed us, thanks in large part to your daily work. We are happy with the right size of our production and as we move towards more seasonal demand curves we are resetting our production levels for sustainable growth.
In a separate statement linked to the preliminary results, Foley says:
As we discussed last quarter, we are taking significant corrective action to improve our profitability outlook and optimize our costs across the business. 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 in the future.
He adds that the company expects to share more information on the moves when Peloton releases its results on February 8. These actions included “adjustment” production in response to a drop in demand – although the executive was careful to push back on the declaration of this production. on each of his four bicycle/treadmill devices will shut down for weeks or months outright.
Foley also acknowledged reports of restructuring and layoffs, following a report from consultancy McKinsey. “In the past, we’ve said layoffs would be the absolute last lever we hope to pull,” he wrote. “However, we must now assess the structure of our organization and the size of our team, with the utmost care and compassion. And we’re still looking at all options as part of our efforts to make our business more flexible.
Such reports were seen as confirmation that Peloton overplayed their hand amid increased adoption in the aforementioned “once-in-a-hundred-year event.” The news comes after the company saw a 76% drop in its shares last year, following an astronomical rise in 2020, due to pandemic demand.