Peloton CEO and co-founder John Foley published an open letter yesterday in response to media reports that the company will temporarily halt production of its bikes and treadmills, stating that leaked internal documents were “incomplete, out of context, and not reflective of Peloton’s strategy.”
Based on internal documents procured by CNBC, the report claims that Peloton will stop its Bike production for the next two months, while halting productions of its treadmills for six weeks starting in February. According to the report, the company is now struggling to offload a huge inventory of Bikes and Treads numbering in the thousands. Among the leaked documents was a confidential presentation dated January 10 that cited a “significant reduction” in demand for Peloton products around the globe due to shifting consumer trends and stiff competition.
Peloton shares plunged by as much as 24% after the news broke, with trading temporarily halted before closing with a drop of 22% yesterday.
In a letter published yesterday on Peloton’s website, Foley pushes back, saying that the rumors that the company is “halting all production of bikes and Treads are false.” He continues:
We have always done our best to share news with you all first, before sharing with the public. This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press. The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. 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.
Notably, we’ve found ourselves in the middle of a once-in-a-hundred year event with the COVID-19 pandemic, and what we anticipated would happen over the course of three years happened in months during 2020, and into 2021.
We worked quickly and diligently to meet the demand head-on at a time when the world really needed us, in large part thanks to how hard you worked every day. We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth.
Last November, Peloton reported major losses in its earnings call for fiscal Q1 2022, and Wall Street analysts aren’t optimistic for its upcoming February 9 report, citing the likelihood of a weak holiday sales season.
CNBC also reported this week that Peloton has hired consulting firm McKinsey & Co. to help find ways to slash costs, which could signal job cuts and store closures. According to the report, “a person familiar with the matter said Peloton has already started layoffs in its sales division.”