Embattled Peloton CEO John Foley denied the company is pausing production of its fitness equipment hours after reports detailed a manufacturing halt due to sagging demand.
In a note to employees published Thursday night, Foley acknowledged that Peloton was “resetting our production levels for sustainable growth.” But he added that reports the company was “halting all production of bikes and Treads are false.”
Foley, whose leadership has drawn criticism in recent weeks, added that Peloton has “identified a leaker” providing information to the media and would be “moving forward with the appropriate legal action.”
“This week, we’ve experienced leaks containing confidential information that have led to a flurry of speculative articles in the press,” Foley said in the note. “The information the media has obtained is incomplete, out of context, and not reflective of Peloton’s strategy. It has saddened me to know you read these things without the clarity and context that you deserve.”
Foley’s note followed CNBC’s report that Peloton would temporarily halt production of its flagship bike and treadmill products due to a “significant reduction” in demand. Peloton shares plunged nearly 24 percent by market close Thursday following the report, erasing more than $2 billion in value.
The Post reported Peloton is delaying the opening of its $400 million factory in Ohio from 2023 to 2024 due to a backlog of inventory. A source said Peloton’s warehouse and delivery centers have cut back to 20 hours per week.
Foley also addressed the possibility of layoffs at Peloton after CNBC’s report noted cuts had already begun in its sales division. The fitness company has reportedly hired consulting firm McKinsey to review its cost structure, which could result in job cuts or store closures.
“In the past, we’ve said layoffs would be the absolute last lever we would ever hope to pull,” Foley said. “However, we now need to evaluate our organization structure and size of our team, with the utmost care and compassion.”
The Peloton CEO added the company was “considering all options as part of our efforts to make our business more flexible.”
In a separate pre-earnings release, Peloton said it now expects revenue of $1.14 billion in its second fiscal quarter of 2022, up from its previous guidance of $1.1 billion to $1.2 billion. The company expects to report 2.77 million connected fitness subscribers as of the quarter’s end, down slightly from its forecast range.
The company will report earnings on Feb. 8.
Peloton’s stock rebounded about 7 percent in premarket trading Friday after Foley’s note surfaced.
Peloton shares have plunged from highs achieved in the early months of the COVID-19 pandemic, when homebound consumers invested in at-home workout equipment. The stock is down more than 80 percent over the last 12 months.