Peloton Interactive is facing civil monetary penalties in the United States over its May 2021 recalls of its Tread+ and Tread treadmills, it disclosed in its annual report filing yesterday. Last month, Peloton, working to improve its fortunes after numerous missteps, was informed by the U.S. Consumer Product Safety Commission that the government body believed the company failed to meet statutory obligations under the Consumer Product Safety Act.
Besides the current CPSC investigation, the company is facing other litigation related to injuries sustained by consumers who used or purchased the Tread+. In April 2021, the CPSC issued a consumer warning about safety hazards tied to the treadmill, including one that led to the death of a child. Four months later, Peloton announced a repair for the Tread before resuming sales. It continues to work on potential hardware enhancements for the Tread+, which remains recalled, it said.
As a result of the two recalls, Peloton took reductions to its annual connected fitness product revenues of $81.1 million for the year ended June 30, 2021, and $48.9 million for the year ended June 30, 2022. The company also took inventory write-downs and logistics costs of $15.7 million in FY21, followed by $8.1 million in FY22.
