A Peloton Interactive Inc. Tread exercise machine for sale at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.
Adam Glanzman | Bloomberg | Getty Images
In a major reversal, Peloton announced Wednesday voluntary recalls of both its treadmill machines over safety concerns.
Its shares tumbled more than 6% on the news.
The company is advising customers who already have either the Tread or Tread+ products to immediately stop using the equipment and contact Peloton for a full refund or other qualified remedy.
The U.S. Consumer Product Safety Commission had previously warned about Peloton’s Tread+ product last month, after one child died in an incident involving the machine and there were dozens of other reported injuries.
The CPSC had said that Peloton’s treadmills are designed differently than those of its peers, with “an unusual belt design that uses individual rigid rubberized slats or treads that are interlocked and ride on a rail.” That’s instead of a thinner, continuous belt. There is also a large gap between the floor and the belt of the Tread+, leaving room for things to wiggle their way under.
The commission simultaneously in April released a graphic video, captured by a home security camera, of a young boy being pulled under one of the Tread+ machines and struggling to free himself.
But Peloton pushed back on the recommended recall at the time, and told customers there was no reason to stop using its treadmills.
“I want to be clear, Peloton made a mistake in our initial response to the Consumer Product Safety Commission’s request that we recall the Tread+,” CEO John Foley said in a statement Wednesday. “We should have engaged more productively with them from the outset. For that, I apologize.”
Peloton also said it will work with the CPSC to set new industry safety standards for treadmills.
“The agreement between CPSC and Peloton is the result of weeks of intense negotiation,” said Robert Adler, acting chairman of the CPSC.
While Peloton doesn’t break out sales of its treadmills versus cycles, Cowen & Co. had previously estimated that the Tread+ will represent about 2.2% of unit sales in 2021. That’s out of about 1.633 million stationary bikes and treadmills combined, it said.
In 2020, Peloton reported $1.8 billion in revenue, up from $915 million a year earlier.
Peloton is set to report earnings after the market close on Thursday.