Peloton is delaying the opening of its $400 million US factory as customer demand wanes, new report says
Peloton is delaying the opening of its new factory in Ohio, the New York Post reported.
The factory was slated to cost $400 million.
Sources told the Post that Peloton is reducing production in other factories due to falling demand.
Peloton is reportedly delaying the opening of its new $400 million Ohio factory and cutting back production at other manufacturing facilities because of waning customer demand.
Sources familiar with the matter told the New York Post that the opening of Peloton's factory in Ohio, slated for 2023, will be pushed back a year. The company has also cut back on production at its manufacturing facilities in North Carolina and Washington, one source said, in order to "keep [workers] happy and the public quiet without announcing a shutdown", according to the paper.
Peloton did not immediately reply to an Insider request for comment made outside of normal operating hours.
The news comes after CNBC reported leaked internal documents in which it said the company outlined plans to pause production of new bikes and treadmills this year because of falling demand and high inventory levels. Foley later denied these reports in a public letter to employees, saying that the company is not halting production but rather "right-sizing" and "resetting" it.
Sources told the Post that Peloton's warehouse and delivery centers are also cutting hours because demand has dropped.
After achieving explosive success during the pandemic, Peloton has struggled in more recent months as consumers have returned to gyms and new at-home fitness concepts have cropped up and made a dent in its sales.
The company said in recent earnings calls that it is looking to cut costs as revenue growth has slowed. An audio recording recently obtained by Insider, revealed how Peloton's top executives discussed plans to lay off 41% of the sales and marketing teams and some of the e-commerce and retail teams. According to CNBC, the company has reportedly hired management consultancy firm McKinsey to handle these job cuts and restructurings
In its most recent quarterly results, released in November, revenue grew 6% to $805 million, a substantial drop from the 232% growth recorded in the same period a year earlier. Sales of connected fitness products, such as Bikes and Treads, fell 17% to $501 million. While subscription revenue grew 94% to $304 million, there were signs that subscribers were less engaged. They completed four fewer workouts per month in the quarter compared to a year earlier.
After market close on Thursday, the company released preliminary results for its 2022 second quarter, which indicated that its revenue would be within its previously forecasted range of $1.1 billion to $1.2 billion. Peloton said that it would add fewer connected fitness subscribers during this quarter than previously estimated.
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