When gyms closed due to social distancing rules it created a boom period for at-home fitness companies.
Peloton was the biggest benefactor of this trend. The company's connected fitness devices became a status symbol during this dark period and its workouts allowed for a sort of socialization during a period where actual socializing was not allowed.
The problem, for Peloton (PTON) and rival at-home exercise companies, was that Covid pulled demand forward, Many connected fitness companies saw record sales during this bleak period, but, once lockdowns ended, people went back to gyms.
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Exercise equipment that costs more than $1,000 made sense when people could not spend money on vacations or going out to dinner. It became an absurd luxury once gyms reopened and exercise became something you could do with other people for a moderate monthly charge.
That change, along with a bit of a backlash over its elitist marketing, has put the future of Peloton in doubt. The shares are down nearly 98% from their December 2020 peak close of $162.72.
Falling sales and limited demand are not limited to the biggest name in connected fitness.
Other players in the space have struggled, and one of the pioneers in the field, a company founded in 2001, has filed for bankruptcy.
Image source: Peloton.
Home fitness company files for Chapter 11 bankruptcy
Peloton did not create the home fitness category. A number of companies were in the space before the better-known company's 2012 founding.
American Home Fitness, while only a regional brand, has been around much longer than its famous rival.
"As a locally owned and operated business since 2001, American Home Fitness understands and values our responsibility to the local communities that we operate in," the company shares on its website.
The company makes and sells a vast array of exercise equipment ranging from old-school weights to all types of connected fitness devices. American Home Fitness takes a very customer-friendly approach.
"Every member of our team is experienced using and maintaining every piece of equipment we sell. We are athletes, trainers and fitness experts. We listen to your needs and your goals, and we help you find the perfect equipment to help satisfy both," the company posted.
American Home Fitness has tried to build a personal relationship with its customers.
"We're not here to sell you the biggest, most expensive piece of equipment just because it's this month's promotion. We truly want to match you with the fitness equipment that you will use week after week because you genuinely enjoy using it, and it makes you feel good," the company added.
American Home Fitness files for bankruptcy
American Home Fitness, based in suburban Detroit, filed for Chapter 11 bankruptcy protection on April 2. The company has assets between $1 and $10 million with liabilities between $100,000 and $500,000.
The bankruptcy filing will allow the company to get out of leases for brick-and-mortar locations that have not performed well in the post-Covid era.
“This company was performing really well,” the company's legal representative Charles Bullock told Crain’s. “In fact, during COVID, it had very strong years. Post-COVID, there’s been a real decline in at-home exercise. Foot traffic is down significantly at their stores, and they still have leases that they have to pay on.”
The company's Chapter 11 bankruptcy filing said that there will be funds available for unsecured creditors. American Home Fitness intends to keep operating after its reorganization.
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American Home Fitness plans to honor the $12,500 in gift cards it has outstanding.
“The debtor filed this bankruptcy to reorganize its financial affairs to better meet market demand in the current retail environment,” the filing said. “The debtor is confident in its ability to emerge from its reorganization as a stronger, more efficient operation.”
