Peloton, the highly successful exercise equipment company, is in a fight for its sales growth as regulators may force it to recall many of its treadmills, according to The Washinton Post. A recall of such a size could undermine its reputation, harm revenue, and knock its share price severely, most likely.
The Consumer Product Safety Commission has told Peloton to reveal the name of a child who died in a treadmill accident. It claims there have been a number of injuries on the machines. In an investigation, The Washington Post reports:
The two sides also are clashing over whether Peloton’s treadmills need to be taken off the market. The company and regulators have been negotiating this week over the wording and timing of an agency warning to alert consumers to potential dangers posed by the company’s Peloton Tread+, a $4,300 exercise machine, these officials said. A new safety warning from the CPSC is expected to be posted as early as Saturday, officials said.
Peloton has strenuously objected to the idea of a recall. The agency, according to the Post, rarely forces such an action, but it is not out of the question.
In a more aggressive article in the Daily Mail, entitled “Peloton fights federal safety recall of ALL their $4K treadmills after one child died and other customers were injured in accidents last month” it reported:
Peloton is fighting a federal safety recall and has allegedly delayed an investigation into potential safety problems after it was revealed that a child died and others were injured in accidents on its treadmills last month.
Peloton Interactive, Inc has a market capitalization of $34.2 billion. Its stock has dropped 23% this year. However, over the last year, it has risen 220%. It announced revenue of $1.06 billion in the most recently reported quarter, up from $389 million in the same period the year before. Net income was $64 million up from a loss of $61 million.
While Peloton has increased the number of products it offers, and the number of people who subscribe to its services, several competitors have hit the market. These include products from widely known companies Bowflex and NordicTrack.
The recall problem may be the largest one the company has ever faced, and, if it worsens, Peloton faces a crisis that could undermine sales significantly.