Updated at 12:28 pm EST
Peloton Interactive (PTON) shares jumped higher Friday after the connected fitness equipment maker rolled out a series of price hikes on its signature bike and treadmills.
Bloomberg News also reported that the company is planning to cut around 800 jobs, while closing several stores, as part of a “significant and aggressive reduction” in its retail footprint under the turnaround strategy of CEO Barry McCarthy.
Pelton said the price of its Bike+ will rise by 25% for US customers, to $2,495, while the price of its Treadmill will rise nearly 30% to $3,495. Price increases for its fitness equipment in Canada, the United Kingdom, Germany were also unveiled Friday, with the cost of its original Peloton Bike remaining unchanged in all of its markets.
The price hikes come amid some of the fastest consumer price increases in more than four decades, as well as a series of supply-chain snarls that have complicated the group’s in-house production.
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“In April of 2022, we lowered prices on our equipment to make the entry point for new Members more accessible,” the company said in a statement published on its website. “Today, we’re updating the pricing of our award-winning premium hardware. Inspired by the progress we’ve made on our transformation journey, we’re adopting a more strategic pricing strategy for our premium products.”
Peloton shares were marked 3.8% higher in early afternoon trading following the price increase announcements Friday to change hands at $12.36 each
Last month, Peloton said it would stop making its flagship exercise bike in-house and instead expand a manufacturing contract with a group in Taiwan.
Rexon Industrial Corp will be the primary manufacturer of Pelton’s fitness equipment, including its iconic stationary bike and its popular treadmill.
Peloton said the shift forms part of its strategy to both simplify its supply chain and focus on technology and content under the turnaround plans of new CEO McCarthy.
Peloton posted a wider-than-expected third quarter loss of $2.27 per share in late May, with McCarthy cautioning that the overall business was ‘thinly capitalized’, with only $879 million in unrestricted cash at the end of the quarter, and unveiled details of a $750 million term borrowing agreement with Goldman Sachs and JPMorgan.
Looking into the current quarter, Peloton said it sees revenues in the region of $675 million to $700 million, and plans to end the period with just under 3 million subscribers to its Connected Fitness program