Fitness bike maker Peloton is reducing the price of its flagship bike as sales slow down now people are returning to the gym and exercising less at home.
From Thursday, the US company will cut the price of its less expensive Bike machine by around 20% to $1,495. The change in price will happen across all markets, including Canada, the UK, Germany and Australia, as well as in the US.
The move comes as revenue growth started slowing down and the firm’s losses increased in the fourth quarter of the year.
The company also faced problems, having to recall a treadmill in May, following a child’s death. This proved costly, putting additional strain on its finances.
Sales of Peloton products surged during the coronavirus pandemic as more people exercised at home. In the year to 30 June, sales more than doubled to $4bn.
Problems for Peloton
However, the New York based firm only expects revenue of $800m in the financial year’s first quarter, which is a lot lower than market estimates of $1bn. In addition, cutting the price of its flagship bike will hit the firm’s profitability, with shares falling 15% in after hours trading.
This is the second time in a year that Peloton has slashed the price of its Bike product.
In a letter to their shareholders, the firm say they know that price is “a barrier”, so are “pleased to offer our most popular product at an attractive everyday price point”.
Next week, Peloton will start selling a cheaper redesigned model of its Tread running machines in the US. This is as a result of having to pull from sale an older version and the more expensive Tread+ machine. The Tread+ fuelled safety concerns after a child was pulled under the machine and died. While a number of users reported complaints about the Tread’s touch screen falling off.
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