Peloton said it expected its voluntary recall of up to 125.00 treadmills to cost $ 165 million as it stops taking orders, cancels all deliveries, issues full refunds and forgoes three month subscription fee to anyone who keeps their machines.
The fitness equipment group recalled the treadmills Wednesday after reporting injuries and one death.
CEO John Foley, who was criticized for initially dismissing warnings from regulators on the treadmill, apologized for his previous inaction and said he would rather take ‘short-term pain’ to prioritize safety and future brand investments.
For anyone guarding the machines, a “in the coming days” software update locks the treadmill belt when not in use to prevent accidents in which pets and children have been pulled under. the machine.
The expected blow to profits came as Peloton reported third-quarter revenue of $ 1.26 billion for the three months ending in late March, beating forecasts by $ 1.1 billion for a 141% gain over the previous year.
The pioneer of connected fitness, one of the the biggest beneficiaries home orders from the pandemic as gyms around the world were forced to close, forecasted June quarter revenue of $ 915 million, compared to a forecast of $ 1.16 billion, according to the estimates compiled by Visible Alpha.
For Peloton’s full year ending in June, adjusted earnings before interest, taxes, depreciation and amortization are expected to be $ 240 million lower. This bigger success reflected lost treadmill sales as well as an additional $ 15 million in expedited shipping costs as a group. struggled to meet demand for its stationary bikes.
The forecast was released on a conference call with analysts, and some investors feared worse. Earlier, when releasing its third quarter tax results, Peloton shares fell more than 4 percent. During the earnings call, stocks hit a 5 percent gain.
Treadmill customers have until November 2022 to return their machine for a full refund.
