Peloton delays launch of cheaper treadmill after Tread+ recall, plans software update with safety feature
Peloton plans to send a software update in the next few days to Tread+ treadmills with a digital PIN code that can be used to lock the device.
The exercise services company, which makes exercise bikes and treadmills, on Wednesday agreed to voluntarily recall the Tread+ treadmill, as well as the Tread treadmill, covering about 125,000 and 1,050 units, respectively, in the U.S.
Last month, the U.S. Consumer Product Safety Commission (CPSC) warned consumers with small children or pets to stop using the Tread+ after the fitness company reported a child’s death linked to the product.
Peloton refused to issue a recall at the time, but did so on Wednesday, and quit selling the products.
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“Peloton made a mistake in our initial response to the (CSPC) requests that we recall our Tread+ product,” company co-founder and CEO John Foley said Thursday during a conference call with investment analysts. “We should have been more open to a productive dialogue with them from the outset.”
The voluntary recall and cessation of sales was “something we should’ve considered sooner,” he said.
Peloton and the U.S. Consumer Product Safety Commission announced the voluntary recall of the Tread+ and Tread treadmills. (Photo: Peloton)
Owners of the Tread+ treadmill, which starts at about $4,300, can return the product or they can contact Peloton to have the company pay to move the device to another room.
The Tread treadmill, priced at about $2,500 and sold more widely in the U.K. and Canada, had been set for a full U.S. rollout on May 27, but that has been delayed.
The company notified the CSPC last week about a defect involving a loose touchscreen that can become detached from the device. There have been six reports of the touchscreen falling off, but no injuries in the U.S. The company hopes to have a fix within six to eight weeks and bring the Tread to market in July.
As for the Tread+, the CPSC said it had received 72 reports of people, pets or objects “being pulled under the rear of the treadmill, including 29 reports of injuries to children such as second- and third-degree abrasions, broken bones, and lacerations.”
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Peloton adjusted its revenue forecast for the current quarter (April-June) to account for about $165 million in costs due to the treadmill sales stoppage, refunds for returned products and three-month credits to digital subscriptions for treadmill content.
The exercise bike and treadmill company reported a loss of $8.6 million, which was lower than the $38 million forecast by analysts polled by S&P Global Market Intelligence. Peloton posted revenue of $1.26 billion in the period, also beating analysts’ expectations of $1.1 billion. The company reported a loss of $38 million and revenue of $524.6 million in the same quarter a year ago.
Peloton shares have dropped 45% since the beginning of the year. In the final minutes of trading on Thursday, shares hit $83.78, more than doubling in the last 12 months.
The company’s market cap, at $24.7 billion on Thursday, is down about $4 billion from Wednesday before Peloton announced the voluntary recall.
Contributing: Nathan Bomey
Follow Mike Snider on Twitter: @MikeSnider.
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