FILE PHOTO: A Peloton logo is seen after the ringing of the opening bell for the company’s IPO at the Nasdaq Market site in New York City, September 26, 2019. REUTERS/Shannon Stapleton
May 5, 2021
(Reuters) -Peloton Interactive Inc on Wednesday announced a recall of its treadmills, reversing course just weeks after saying there was “no reason” to stop using the exercise machines despite reports of multiple injuries and the death of a child in an accident.
Chief Executive Officer John Foley also apologized for the company’s initial reaction to a report from the U.S. Consumer Product Safety Commission (CPSC) in April, which warned consumers about the dangers of Peloton’s Tread+ treadmills. It had called the report “inaccurate and misleading”.
“I want to be clear, Peloton made a mistake in our initial response to the CPSC’s request that we recall the Tread+,” Foley said https://www.cpsc.gov/Newsroom/News-Releases/2021/CPSC-and-Peloton-Announce-Recall-of-Tread-Plus-Treadmills-After-One-Child-Death-and-70-Incidents-Recall-of-Tread-Treadmills-Due-to-Risk-of-Injury. “We should have engaged more productively with them from the outset. For that, I apologize”.
Peloton’s shares fell about 13% to $84.54 on the recall announcement, which applies to both the Tread+ and Tread treadmills.
Reports of dozens of incidents of children being sucked beneath its machines have been a shadow over Peloton in the last few months, eating away at some of the stock’s gains that were spurred by a surge in popularity of its exercise bike among people staying at home during the COVID-19 pandemic.
Peloton is slated to put out its earnings report after markets close on Thursday. Analysts are expected to seek more clarity on the company’s response to the issue.
The company generates most of its revenue from exercise bikes and subscription services, and analysts estimate that only 6% of its connected fitness subscribers own a Peloton Tread+.
“A recall of the product at this point is the right thing to do for the long-term health of the company … but, as CEO Foley indicated, the recall probably should have been done earlier,” said Walter Thompson, president, American College of Sports Medicine.
Peloton’s Tread+ is a “slat-belt” treadmill, which needs a higher torque motor and ground clearance than a typical home treadmill, making them a risk around children and pets.
The company previously said to keep children and pets away from the treadmills at all times.
Peloton did not immediately respond to a Reuters request for additional comment.
(Reporting by Shariq Khan, Ankit Ajmera, Uday Sampath and Sanjana Shivdas in Bengaluru; Editing by Shounak Dasgupta)