Peloton Interactive Inc. said it identified a flaw related to the seat on its entry-level bike — a problem that affected a small fraction of customers — and is working on a solution with US regulators.
(Bloomberg) — Peloton Interactive Inc. said it identified a flaw related to the seat on its entry-level bike — a problem that affected a small fraction of customers — and is working on a solution with US regulators.
The company disclosed the issue in a filing Thursday that followed its quarterly earnings report and alerted employees through a memo from Peloton’s internal product safety committee. The defect involves the seat post — the part that attaches the saddle to the frame — on its original bike model, which costs $995. In certain circumstances, the post can break at the weld joint.
In the filing, New York-based Peloton said it is working with the US Consumer Product Safety Commission on a remedy. As of the end of April, the company identified 35 reports about the problem — out of 2.4 million units sold since the bike’s launch in the US and Canada.
Peloton said there were 12 reported injuries with the issue, including one wrist fracture. The company isn’t immediately stopping sales and a formal recall hasn’t been announced. It also didn’t say if all units have the flaw or what causes the post from breaking off of the bike. The model in question went on sale in 2014. The issue doesn’t affect the newer Bike+ model, which launched in 2020.
This marks the fourth time Peloton has disclosed a product defect in recent years, following recalls of bike pedals and both its treadmills. In 2021, Peloton was forced to cease sales of its high-end treadmill, the Tread+, after it was revealed that a young child died after being swept under the device. It remains off the market two years later while Peloton works on a fix, and refunds are still being offered.
The decision to disclose the seat-post concern contrasts with how Peloton handled earlier recalls. When the problems emerged with its treadmills, the company — under previous management — said it disagreed with the government’s findings and that a recall wasn’t necessary. It ultimately apologized for that approach. The bike flaw, on a percentage basis, is also rare and hasn’t resulted in as much damage.
“You may be wondering why we have taken this action for an impact of this size,” the company said in the memo, which it provided to Bloomberg News. “As a Member-first company, and as part of our commitment to product safety, we always work proactively with regulators and follow their lead in all safety related matters to protect our Members.”
The company said it identified the issue as part of a “continued evaluation” by a new internal product safety compliance program. Peloton added that it can’t announce specifics around its fix for the bikes until a plan is approved by the safety commission. The memo to employees was signed by a pair of executives in charge of product safety.
The company’s earnings report, released Thursday morning, included higher-than-expected revenue but also a warning that it would be tough to grow in the current quarter. Peloton also agreed to pay $75 million to settle an International Trade Commission dispute with Dish Network Corp. over content-streaming technology.
In the filing, the company said it is incurring expenses related to the proposed bike fix, but the costs are currently believed to be immaterial.
Peloton briefly paused sales of its cheaper treadmill after its screen in some cases was found to fall off during use. The pedal recall, meanwhile, involved a clip-in component on about 27,000 bikes.
The full Peloton memo to employees:
As you may know, Peloton has an Executive Product Safety Committee that is responsible for addressing safety risks associated with our products, services and apparel. This committee was formed as part of a new Product Safety Compliance Program and to address, in part, the lessons we learned following the Tread+ recall. As co-chairs of that Committee, we want to share a current example where we are doing exactly that.
As a part of our continued evaluation for product safety, we identified a potential issue involving the seat post of our original Peloton Bike, and swiftly and voluntarily, notified the US Consumer Product Safety Commission (CPSC). We are working in lockstep with the CPSC which means we will announce a corrective action plan once approved.
Out of 2.4 million Bikes sold in the US and Canada, there have been reports of 35 seat posts breaking during use as of April 30, 2023. Of these, 12 involved reports of injuries, including one wrist fracture. You may be wondering why we have taken this action for an impact of this size. As a Member-first company, and as part of our commitment to product safety, we always work proactively with regulators and follow their lead in all safety related matters to protect our Members.
Working closely with the CPSC means we will only announce a corrective action plan once approved. Subsequently, we are not able to provide ongoing updates in real time until our plan is approved and ready to be announced to Members. We will continue to keep you informed as best we can.
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