SoulCycle closes 25% of studios, Peloton lays off 800 employees, raises prices to stay afloat
The home fitness bubble that has inflated in the wake of the covid-19 pandemic has driven sales up at all price points, from high-end equipment to the most basic fitness dumbbells.
By January 2022, a quarter of all health and fitness facilities had closed, most permanently, and the US fitness industry reported a $29.2 billion revenue loss, according to the National Health & Fitness Alliance. (NHFA).
The carnage continues.
Indoor cycling studio SoulCycle announced it was closing about 20 of its 83 studios and laying off about 75 of its 1,350 employees, a sign that people’s exercise habits are still changing. The closures include locations in California, Washington, DC, Massachusetts, Illinois, Florida and Georgia.
“As riders continue to return to studio classes, there have been many changes as a result of the pandemic,” a SoulCycle spokesperson told CNN Business in a statement, saying some of those changes are based on geography.
Peloton, one of the biggest beneficiaries of the home fitness bubble, is laying off 780 employees, closing an unknown number of its 86 stores, raising prices on its equipment and retooling bikes for do-it-yourself assembly to lower the costs. The company increased the price of its subscription plan for live and on-demand classes from $39 to $44 per month.
“We will continue to drive hardware costs down and design it so you can put it together, so we can ship it via FedEx,” Peloton CEO Barry McCarthy said in an interview.
Are you interested in getting smart about life insurance?
No doctor visit required, get a policy for as low as $30 per month
Click here to go to the next step
Meanwhile, you’ll pay an extra $500 for Pelotons Bike+ which goes up to $2,495 in the US. The price of his Tread machine increases by $800 to $3,495.
Peloton’s first-quarter revenue grew to $964.3 million from $1.26 billion in 2021. Its losses rose from $8.6 million a year earlier to $757.1 million in the first quarter of 2022.
The company said it has 2.96 million connected fitness subscribers with Peloton equipment who pay for a subscription to its live and on-demand workout classes.
In July, Peloton announced that it would stop all in-house manufacturing and instead expand its relationship with a Taiwanese manufacturer. The company also plans to exit last-mile logistics, close its remaining warehouses and outsource delivery work to third-party vendors, CNBC reported.
Peloton’s stock price has fallen more than 60% so far this year, with an all-time low of $8.22 in mid-July. The shares traded as high as $120.62 about a year ago. News of the company’s about-face on pricing and cost-cutting sent its stock price up 13% on Friday, August 12.
Mandatory health club closures have been imposed in many states in an attempt to halt the spread of covid-19, ending 10 years of revenue growth before the outbreak. With the temporary closures and subsequent permanent closures of health clubs and studios, around 1.5 million people have lost their jobs in the industry, according to the NHFA. This represents about 47% of jobs in the industry.
Flywheel, an indoor spinning concept similar to SoulCycle, closed for good in 2020. Other home fitness equipment makers are also struggling, including NordicTrack parent company iFit Health and Fitness, which canceled an initial public offering. . Tonal, a maker of home gyms, cut 35% of its staff in July, CNN reported.
But affordable gym chains like Planet Fitness seem to be thriving. Charging just $10 for a monthly membership, Planet Fitness recently reported that its membership base had grown to 16.5 million.