Peloton recalling all of its connected treadmills

The company is advising customers who already have the products to immediately stop using it and contact Peloton for a full refund.

Peloton Ttreadmill

The other day, Peloton announced voluntary recalls of both its treadmill machines over safety concerns.

The announcement marked a reversal of Peloton’s initial reaction and comes after weeks of discussions with the U.S. Consumer Product Safety Commission.

Peloton apologized for not acting more quickly to resolve the issue after reports of one death and dozens of injuries.

The specifics

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 remedies. It added that it is working on a repair that will be offered to treadmill owners in the coming weeks.

The recall affects about 125,000 Tread+ machines and roughly 1,050 Tread products in the U.S.

Previously, the CPSC said it has received 18 reports about the touchscreen loosening and six reports of the touchscreen detaching and falling from the Tread. The group had previously warned about Peloton’s Tread+ product last month, after one child died in an incident involving the machine. There were also dozens of other reported injuries.

The regulatory agency said Peloton’s treadmills are designed differently than 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.

However, Peloton pushed back on the recommended recall at the time, telling customers there was no reason to stop using its treadmills, so long as children and pets were kept out of the area while in use. The company had also recommended a key be used to lock the equipment after each workout.

It’s unclear how much damage Peloton has done to its reputation, though.

On the record

“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.”

“We acknowledge that this recall will likely result in significant near-term one time financial costs and operational disruption, with potential reputational damage,” Truist Securities analyst Youssef Squali said in a note to clients. “Stepping back and looking at the broader picture, however, we believe that the secular growth trends in the home fitness industry remain intact.”

The context

While Peloton doesn’t break out sales of its treadmills, research firm Cowen had previously estimated that the Tread+ would represent about 2.2% of unit sales in 2021. That’s out of about 1.63 million stationary bikes and treadmills combined, it said.

Peloton reported in 2020 revenue of $1.8 billion, up from $915 million a year earlier.

Following the news of the recall, the company’s stock when down about 45% year to date. It has a market cap of $24.3 billion.