(Bloomberg/Samantha Kelly) — Peloton Interactive Inc. has so far seen sluggish sales for its new artificial intelligence-powered exercise equipment, billed as the catalyst for a long-promised turnaround.
The company’s new lineup, called the Cross Training Series, is gaining only modest traction at retail stores across the US eight weeks post-launch, according to managers at dozens of Dick’s Sporting Goods and Johnson Fitness & Wellness locations — the two main brick-and-mortar sellers for Peloton equipment — who spoke to Bloomberg. While there’s been an uptick in foot traffic from customers interested in trying out the higher-end treadmill and bike, this has yet to translate into significant sales, the managers said.
Still, Peloton expects sales to ramp up through the holiday shopping season, according to a person familiar with the matter. It’s already running Black Friday promotions, including discounts of as much as $1,500 for a treadmill-and-accessory bundle. To prepare for the expected demand, the company recently increased the volume of its maritime imports compared with previous years, according to data from the trade database ImportGenius.
A Peloton spokesperson declined to comment. Shares of the company briefly fell as much as 2.3% to a session low on Tuesday before rebounding to close at $6.74, up 2.1%. The stock has been down about 23% so far this year.
Peloton has been stuck in a multi-year sales slump since pandemic lockdowns ended and people emerged from their homes to resume exercising outdoors and in gyms. The upgraded equipment, unveiled last month under new management, includes redesigned versions of the Bike, Bike+, Tread and Tread+, along with a Row+ that replaces the previous rowing machine. All of the new machines include Peloton IQ, an AI platform offering personalized guidance, insights and coaching plans.
One headwind could be sticker shock. Peloton raised prices across its portfolio — increasing equipment costs by an average of 11% and subscription fees by about 19%. Analysts expressed concern at the time of the announcement that the price hikes would undermine Peloton’s ambitions to win over new members, especially in the current economic climate.
As of the second week of November, Amazon’s product page for the Bike+ Cross Training Series said only around 50 people had purchased the product over the trailing month. Peloton’s warehouse movement remained slow around the same time, according to a person familiar with the matter.
But there are some positive signs: Since the company launched its Black Friday promotions, that rough number of Amazon sales has grown to more than 100. And visits to Peloton’s website were essentially flat year-over-year in October, according to data from UBS — an improvement after traffic was down 18% in September.
The October launch coincided with a typically slower period for fitness equipment sales, as activity tends to pick up in early to mid-December. Demand typically remains strong through mid-February, driven by New Year’s resolutions. Peloton said revenue for the holiday quarter will be $665 million to $685 million, which would be about flat at the midpoint compared with the year-earlier period.
“Many consumer budgets are stretched, and a lot of households are focused on bargains and deals,” said Neil Saunders, a managing director at GlobalData. “The problem for Peloton remains the same: Its products are expensive so a lot of consumers will shun them in favor of cheaper brands. I doubt the AI aspects will make all that much difference among mainstream consumers.”
Chief Financial Officer Liz Coddington has said shoppers tend to pass through a “consideration period,” where they research, evaluate and then decide to purchase the pricey gear. “The consideration period can be quite long before somebody decides to invest in our premium-priced products,” she said at a Citigroup Inc. conference in September.
Meanwhile, Chief Executive Officer Peter Stern, a former Apple Inc. executive who joined Peloton earlier this year to lead the turnaround, said on an earnings call this month that the company plans to spend more on marketing to educate consumers about Peloton IQ, which has been positioned as a major selling point.
Product safety could also be top of mind for some shoppers. Earlier this month, Peloton issued a voluntary recall on about 877,800 units of its high-end Bike+ model in the US and Canada following reports that some seat posts broke, causing riders to fall off. While the recall does not include the newly launched hardware, it carries echoes of a memorable episode in 2023, when Peloton recalled more than 2 million seats for its original Bike product.
(Updates with closing shares in the fourth paragraph.)
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