Peloton is denying a report that it's halting production of its smart gym equipment on declining customer demand. However, the company is warning that layoffs could be on the horizon.
“The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy,” CEO John Foley said.
He issued the statement after CNBC reported on a confidential Peloton presentation that noted a “significant reduction” in customer orders. As a result, Peloton would halt Bike production for two months and Tread manufacturing for six weeks, with the Tread+ potentially not going back into production for the entire fiscal year, according to CNBC.
In response, Foley said “rumors that we are halting all production of bikes and Treads are false.” Nevertheless, he did concede the company is adjusting its production numbers after Peloton saw massive customer demand during the onset of the COVID-19 pandemic.
“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,” he said.
In addition, the company needs to make tough decisions on cutting business costs to make Peloton sustainable over the long-term, Foley said.
“In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull. However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion,” he said. “And we are still in the process of considering all options as part of our efforts to make our business more flexible.
The CNBC report, meanwhile, caused Peloton's stock to drop by more than 20%. According to Foley, the company also identified the leaker behind the CNBC report, and plans to take “legal action” against them.