Peloton unveils treadmill safety fixes

Peloton Interactive Inc has laid out steps to improve the safety of its treadmills as the company calculated an about $165 million hit to current-quarter revenue from a recall of its treadmills.

Shares of the interactive fitness equipment maker reversed course to be up 5.9% at $88.73 in extended trading.

They tumbled about 15% on Wednesday 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 U.S. launch of Tread that was scheduled for May 27.

The company is working with the U.S. 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 $915 million, compared with estimates of $1.17 billion, while annual revenue forecast of $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 $16 million, the company said.

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