Home > Latest News > Peloton Shares Slump 35% Days After Bike Deal With David Jones

Peloton Shares Slump 35% Days After Bike Deal With David Jones

Desperate to get traction in the Australian market with their overpriced interactive fitness bikes, Peloton who recently announced a store within a store deal, with David Jones is now trying to handle how to manage a 35% slump in their shares late on Saturday, Australian time, that saw over $12 billion wiped from the value of the fitness business.

The Company whose products have been described as dangerous has spent tens of thousands on spin doctors in Australia in an effort to ramp up their brand profile.

Peloton Australia country manager Karen Lawson who earlier this month was spruiking the opening of stand-alone showrooms and shop-in-shops David Jones has not commented about the sudden slump in the Companies share value.

The Company launched in Australia in July in an effort to take advantage of COVID lockdowns that saw consumers turning to fitness gear for their home gyms.

The Peloton, bikes cost $2,295 and $3,695 and if that’s not enough you have to fork out $59 a month subscription just to get a heads up on the interactive display and the Peloton software.

As one observer said, “This is a bike for wankers who like to flaunt it”.

The share slump came after Peloton reported weaker-than-expected sales as Americans headed back to their gyms and the market questioned whether the Companies brand image has been tarnished after management initially refused to go along with a recall of Peloton treadmills which have been involved in dozens of serious accidents involving children and adults.

The Peloton Tread+ treadmills have been labelled dangerous by US Federal regulators.

One child died and other children and adults were injured after being sucked under the treadmill’s rotating surface, according to the Consumer Product Safety Commission.

Peloton at first refused to cooperate with a recall, even attacking the agency after the CPSC took the unusual step of warning the public about the dangers.

A backlash from appalled customers quickly changed managements attitude.

On Friday the company reported fiscal first-quarter earnings that showed US$805.2 million in sales, lower than expected by Wall Street, and a widening loss of $1.25 per share.

This has been described as a major slowdown from the pandemic-driven sales boom that Peloton had before the recall.

The company also slashed its sales outlook for the full year to between $1.1 billion and $1.2 billion, below Wall Street expectations of $1.5 billion.

The Company has not said what sales expectations they have for the Australian market.

CEO and founder John Foley cited both supply-chain issues and softening demand due to the reopening of the economy as reasons for the miss.

“We anticipated fiscal 2022 would be a very challenging year to forecast, given unusual year-ago comparisons, demand uncertainty amidst re-opening economies, and widely-reported supply chain constraints and commodity cost pressures,” Foley said in a statement.

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