Key Sentence:
- Fitness bike maker Peloton will cut the price of its flagship bike as people return to the gym and exercise less at home.
- The American company will cut cheaper bike engines by about 20% to $1,495 on Thursday.
The changes Peloton will affect all of its markets, including the United States, United Kingdom, Canada, Australia, and Germany. It comes as the company’s losses soared and revenue growth slowed in the fourth quarter of this year. The company also had to pay for the treadmill, which was recalled in May after a child died.
As more people start exercising at home during the pandemic, sales of Peloton products more than doubled to $4 billion as of June 30. However, the New York-based company expects sales of just $800 million in the first quarter of the fiscal year. Well below the market forecast of $1 billion.
Peloton builds its first factory in the US.
He also said the decision to lower the price of his flagship motorcycle would hurt profitability in the short term, resulting in a 15% drop in stock trading in a matter of hours. This is the second time in a year the company has lowered the price of its bicycle products.
“We know price is still a constraint. We are delighted to be able to offer our most popular products at attractive daily prices,” reads the letter to shareholders. Peloton said it would start selling the cheaper Tread+ engine model in the United States next week. After recalling the older version and the more expensive Tread+ engine for safety reasons.
This happened after a child was pulled under the tread and died. Consumers also reported that the touchscreen fell off the track.