Peloton's share price plunged by more than 20 per cent following reports that the exercise bike company planned to temporarily halt production of its machines.
The report by CNBC claimed Peloton was halting production of its standard bike in February and March, as well as it its most expensive model from December 2021 until June 2022 and its treadmill for six weeks amid softening sales following the pandemic boom.9
The company's chief executive, John Foley, hit back in a blog post, calling the report "incomplete, out of context, and not reflective of Peloton's strategy" despite admitting the company was "undisciplined" in the way it hired following the explosion in demand as people were forced to exercise at home during the coronavirus lockdowns.
CNBC also claims Peloton now has "thousands of cycles and treadmills sitting in warehouses or on cargo ships".
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In an attempt to turn the stationary bike company around, other drastic cost-cutting measures alongside halting production will be implemented, including lay-offs and store closures, in a bid to improve the company's balance sheet and boost the share price.
"We worked quickly and diligently to meet the demand head-on at a time when the world really needed us," Foley said.
"We feel good about right-sizing our production, and, as we evolve to more seasonal demand curves, we are resetting our production levels for sustainable growth."
The stock price, which has crumbled from a high above $150 early last year to below $25 this week, is of lesser concern to some of the top executives at the company, who sold $496 million in stock over the last 12 months. Foley sold $119 million while the company's president William Lynch offloaded $105 million.
In another statement issued alongside the company's quarterly earnings, Foley said: "As we discussed last quarter, we are taking significant corrective actions to improve our profitability outlook and optimize our costs across the company.
"This includes gross margin improvements, moving to a more variable cost structure, and identifying reductions in our operating expenses as we build a more focused Peloton moving forward."
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