In their keen effort to get firmer footing in the Australian market with what many consider to be overly expensisve interactive fitness bikes, Peloton are trying to manage a 35% slump in shares that saw more than $12 billion wiped from the value of the fitness business.
The Company recently announced a store-within-a-store deal with David Jones, but their products have been described as dangerous. They have 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 in David Jones, has not commented about the sudden slump in their 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 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 fee just to get a heads-up on the interactive display and the Peloton software.
As one observer says, “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 Company’s 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.
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 management’s 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,” he says in a statement.