Peloton (PTON) may not be the perfect candidate for the adage of ‘better late than never.’ The US-based exercise equipment manufacturer came under fire at the start of the year by US regulators for its unsafe treadmill line of products.
The company saw reports of adults and children suffering from injuries alongside one death from the treadmill. This was largely because of the product’s design that used slat-belt technology, which involves a gap between the moving belt and floor. Defected products aren’t anything new, but Peloton’s mistakes are in the way that the company handled the situation. In response to initial reports of injuries, they ignored the regulator’s guidelines to issue a product recall. It then backtracked after customer and media backlash and issued a relaunch of its Peloton Tread and a full recall for defect units in May. At a time when demand for digital workouts and home equipment was up by 21% throughout last year, poor customer servicing meant Peloton missed out on the demand-side trends in the fitness equipment industry.
why it matters
Peloton’s earnings are coming up tomorrow — with inconsistent demand for its treadmills, the stock has been down by 34% since its all-time high in January. Analysts expect a net loss $138m for the upcoming earnings. Yet, despite setbacks, the stock was trading at 5% higher two days ago.