Peloton is spiraling, and its downfall could be a harbinger of real trouble for an entire industry. The at-home digital exercise company is one of several that thrived during the pandemic and promised to change forever how we work out. But now, it’s not clear if they’ll be around to finish the at-home fitness revolution they started.
There’s no denying that the pandemic made working out at home extremely popular. After gyms were forced to close their doors, people canceled their memberships and invested in exercise equipment and online class subscriptions instead. So much so that companies like Peloton couldn’t keep up with demand, leaving many customers to wait months for their bikes and treadmills to be delivered. But Covid-19 restrictions didn’t last forever. Eventually, when gyms started reopening, people stopped buying — and using — exercise equipment with the same enthusiasm they had in the spring of 2020.
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This transition has been brutal for Peloton. Sales of new bikes have slumped, and people haven’t bought enough of the company’s newer products, which include two treadmill models and weights, to make up the difference. After losing $439 million last quarter, Peloton decided in January that it would temporarily halt production of its bikes and treadmills to cut costs, according to internal documents obtained by CNBC. Then, on Tuesday, the company said that it would lay off 2,800 people, cancel its plans for a new $400 million factory in Ohio, and that its CEO, John Foley, would step down. Former Spotify CFO Barry McCarthy will take his place.
Many of the issues Peloton faced were specific to the company. Some investors had argued that Foley — who led the company for a decade — just wasn’t up to the task of scaling the company so quickly. Peloton also had a series of slip-ups, including supply chain problems, a very public recall of its treadmills, and a controversial ad campaign.
But Peloton’s demise also coincides with a trend in more people working out like they used to do: at gyms. Demand for in-person fitness classes and gym memberships has rebounded, while Google searches for home gym equipment overall have continued to fall since their high in March of 2020. Foot traffic to gyms has now returned to the same levels as January 2020, according to data from SafeGraph, a geospatial data company. Planet Fitness alone said that, by November, it had recovered 15 million customers, which …….
Source: https://www.vox.com/recode/22925513/peloton-recall-gyms-nordictrack-mirror