Elgin Area Chamber Of Commerce: Peloton Temporarily Halts Production, Jobless Claims Rise, Home Sales Drop

Elgin IL

22 January, 2022

2:29 AM

Description

Press release from the Elgin Area Chamber of Commerce: January 21, 2022 Peloton Temporarily Halts Production Stationary bike and treadmill maker Peloton, which broke ground on a U.S. factory last August, is reportedly suspending production and may close retail stores as demand for its products runs out of steam. Production on its original bike will stop for two months beginning next month through March, CNBC reported, citing internal company documents. In December, the New York-based company had halted production on its more expensive Bike+ until June. Treadmill production will be halted for six weeks beginning next month. Peloton sales soared in 2020 and into 2021 when many people worked from home and there were few options for exercising indoors in fitness clubs. But sales started to slide last year when people were able to go to fitness clubs again. Instead of a supply shortage, the company now has a surplus. The company has been looking at how to cut costs while trying to get a handle on demand. "From forecasting consumer demand to accurately predicting logistics costs, our teams have never seen a more complex operating environment in which to guide our expected results this year," John Foley, the company's CEO, said on an investors call in November for its first fiscal 2022 quarter that ended Sept. 30. Peloton's bikes are made in Taiwan but it is building a $400 million factory outside Toledo, Ohio. Last year, the company completed its purchase of Precor, which has a line of products that includes stationary bikes and treadmills, for $420 million. The deal included Precor's factory in Greensboro, North Carolina. Jobless Claims Rise New claims for unemployment rose for the third consecutive week and were higher than expected. Last week, 286,000 new unemployment claims were filed, 55,000 more than the previous week, the Labor Department reported Thursday. Wall Street had expected the figure to be about 225,000, a drop from 231,000 the previous week. But the raw number of claims that aren't seasonally adjusted fell 83,418 from the previous week to 337,417. MarketWatch reported economists with financial firm Jefferies writin in a note to clients that seasonal issues will be less of a problem in late-January and February. "For now, it is appropriate to be a bit skeptical of strength or weakness in claims," they said in their note. Homes Sales Drop Existing homes sales fell in December but the year finished with the best volume in 15 years. The National Association of Realtors reported Thursday that sales totaled 6.12 million last year, 8.5% higher than in 2020 and the highest level since 2006. Sales in December, however, slowed 4.6% from November and were lower than in December 2020. Lawrence Yun, the association's chief economist, said in a statement that the December sales retreat was "more of a sign of supply constraints than an indication of a weakened demand for housing." The association said the inventory of unsold existing homes hit an all-time low of 910,000, the equivalent of 1.8 months of supply. Yun said he expects home sales will slow this year as mortgage rates rise along with price growth. The median price for all types of existing homes sold in December was $358,000, 15.8% higher than in December 2020. Source: www.CoStar.com This press release was produced by the Elgin Area Chamber of Commerce. The views expressed here are the author's own.