BENGALURU (REUTERS) – Peloton Interactive on Thursday (May 6) estimated an about US$165 million (S$220 million) hit to current-quarter revenue from a recall of its treadmills as the company laid out steps to improve the safety of the equipment.
Shares of the interactive fitness equipment maker reversed course to be up 5.9 per cent at US$88.73 in extended trading on Thursday. They tumbled about 15 per cent the previous day after the company announced the recall following reports of multiple injuries and the death of a child in an accident.
On a post-earnings call after the company beat estimates on demand for its flagship exercise bikes from stuck-at-home fitness enthusiasts, chief executive officer John Foley said Peloton would postpone the US launch of Tread that was scheduled for May 27.
The company is working with the US Consumer Product Safety Commission (CPSC) to build an extra layer of safety features for the Tread+, including a digital pass code to protect against unauthorized use.
Peloton, which has stopped sales of its treadmills in all markets, also flagged some issues with the new Tread such as reports of screws loosening and causing the touchscreen to detach from the unit. Tread sales are expected to begin after the CPSC completes its review, the company said.
The company will offer a full refund on returns of its Tread+ and Tread treadmills and waive monthly all-access subscriptions for both for three months.
Peloton said it expects fourth-quarter sales of about US$915 million, compared with estimates of US$1.17 billion, while annual revenue forecast of US$4 billion came in slightly below estimates and prior company outlook.
The recalls, along with the loss of revenue from subscription waivers, will impact fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization (Ebitda) by about US$16 million, the company said.
Meanwhile, revenue more than doubled to US$1.26 billion in the third quarter, beating estimates of US$1.11 billion, according to Refinitiv data.
Peloton emerged as a pandemic winner as home workouts become all the rage during prolonged lockdowns, with investors now focused on how demand will holdup as vaccine roll-outs in key markets allow fitness centers to reopen and enthusiasts to train outside.
Subscriptions at Connected Fitness, which includes interactive videos that stream live classes, more than doubled to about 2.08 million in the quarter.