Peloton CEO warns of months of order delays, as overwhelming demand sends sales skyrocketing 172% and rattles supply chain
Peloton
- Though Peloton reported a 172% year-over-year sales increse in the company's most recent quarter, the fitness brand is struggling to keep up with overwhelming demand during the pandemic.
- Peleton CEO and founder John Foley told investors on Thursday to anticipate order delays to continue through at least June 2021.
- "While we had expected demand to moderate, the unexpected resurgence of COVID-19 cases in many states has perpetuated the imbalance of supply and demand," Foley wrote in a letter to shareholders.
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Demand for Peloton has never been higher, and while this has prompted sales to soar by 172% year-over-year in the company's most recent quarter, executives say to expect order delays to continue through June 2021.
In a letter to shareholders, Peloton CEO John Foley wrote on Thursday that while the company has significantly increased production and manufacturing capabilities since the onset of the coronavirus outbreak, it does "not expect to return to normalized order-to-delivery windows in in the United States prior to the end of Q2 FY 2021."
"The pandemic has continued to propel demand for our products," Peloton CEO John Foley said on a call with investors shortly after the letter was published on Thursday. "Organic demand for our bike remains strong and member engagement remains elevated, despite improving weather and the gradual opening of brick-and-mortar fitness locations."
On Tuesday, Peloton announced two new products — a premium version of its stationary bicycle called Bike Plus, and Tread, a lower-priced version of its existing treadmill — as well as a much-anticipated $350 price drop of its original bike model.
Consumers that purchased a bike within the past month will automatically receive a $350 refund to their bank account or receive a reduction on their payment plan, while those interested in exchanging an existing model for Bike Plus can do so in exchange for a rebate and free yoga equipment.
According to Foley, the company anticipated demand to return to normal rates after the run on bikes early in the pandemic. However, as the weeks passed, sales of Peloton products continued to spike, prompting a waitlist and widespread order delays as the coronavirus outbreak continued to spread across the US.
"While we had expected demand to moderate, the unexpected resurgence of COVID-19 cases in many states has perpetuated the imbalance of supply and demand in many geographies, causing continued elongated order-to-delivery windows for our customers," Foley wrote in the shareholder letter.
Foley said on the call with investors that the heightened demand for Peloton bikes has subsequently prompted growth to the company's membership program, which also features yoga, strength training, and meditation classes. According to Foley, as of June 30, Peloton had more than 3.1 million global members, an increase of 113%.
Though the company is still working to get through its order backlog, Foley pledged to continue to find ways to reduce delivery lags, which he said have already been cut down in recent weeks.
"While we reduced wait times since May, there remains much work to be done," Foley said on the call.
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