The cycling boom is collapsing – CNN

Bike shops nationwide couldn’t keep them in stock as orders skyrocketed and supply chains twisted. Peloton spent hundreds of millions of dollars in late 2020 bolstering its production and shipping operations as consumers complained about having to wait weeks and months for their $2,000 bikes and treadmills to arrive.

It’s not hard to see why: riding outside was a way to exercise, socialize and get from point A to point B without risking exposure to Covid in the public transport. Riding indoors had a similar appeal – if you couldn’t train in a big, sweaty studio, at least you could connect virtually to a class led by reliable and expansive instructors.

Cut in the summer of 2022, and the bike industry is in trouble.

Here’s the deal: On Friday, Peloton announced it would lay off 800 more people and raise the prices of some bikes and treads – part of a major cost-cutting overhaul under its new CEO, who was tasked with righting the ship after the business failed. to anticipate the desires of consumers to return to the dining room. Peloton’s stock is down more than 90% from its late 2020 high.
And bicycle retailers, much like other street vendors of consumer goods, now face the opposite problem they had in 2020: too much inventory, not enough demand. According to the Wall Street Journal, U.S. bicycle retailer revenue fell 7% in the first half of 2022 from a year ago (compared to gains of 46% in 2020 and 4% in 2021).

SoulCycle, an equally trendy high-end bike company, suffered the reverse of the pandemic boom as it focused primarily on studio classes. Like many gyms, it was forced to close in 2020 and did not reopen for about a year.

Even as people return to gyms, SoulCycle faces another blow to business: inflation.

On Monday, SoulCycle said it was closing about 25% of its 80 sites and laying off 1,350 people. A spokesperson cited “many changes as a result of the pandemic” and the company saw an opportunity to “resize in some markets.”

Meanwhile, more affordable gym chains like Planet Fitness seem to be thriving. The chain said in its results last week that it had expanded its membership base as people “trade in” high-priced gyms, reports my colleague Jordan Valinsky.

For comparison, a no-frills subscription to Planet Fitness in New York costs around $10 a month. A single Soul Cycle class costs $38.

NUMBER OF THE DAY: -31.3

In the latest sign of turmoil in the U.S. economy, New York-area manufacturing suffered a significant and unexpected setback in August, according to a survey released Monday. The Empire State Manufacturing Survey plunged 42 points in August to minus-31.3. This is the second largest monthly decline on record for this closely watched indicator of economic activity.

Any reading below zero indicates a contraction. Economists expected a more modest slowdown in the survey that would signal further expansion.

“Astonishingly terrible,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a note on Monday. “Manufacturing’s momentum has certainly slowed, but it’s a slump.”

KEEP SCORE

There are so many problems with the credit scoring system in America that it’s hard to know where to start. But Equifax’s recent blunders are yet another reminder of the absurd power that credit rating companies wield over Americans, writes my colleague Alexandra Peers.

ICYMI: Earlier this month, Equifax revealed it had sent incorrect credit scores to banks and other lenders for potentially hundreds of thousands of customers. For nearly 300,000 people, this mistake led to a change of 25 points or more in their credit scores – enough for some people to be denied a loan.

To be clear: Equifax has, like, a job. It’s one of three big credit reporting companies that are supposed to accumulate consumer data that is mysteriously whittled down to a number between 300 and 850 and then sold to financial institutions for a profit (more at this point). topic in a minute).

A higher score, of course, is a shorthand way of telling a bank that a person is reliable and likely to repay the loan they seek. Lower scores = less reliable, which means lenders may deny you financing or give it to you with extremely high interest rates.

Oh, and while that data may have life-changing consequences, you don’t own it, and you don’t have much power to challenge it. The process is deliberately obscure. And you can’t opt ​​out of the system. I repeat, you cannot unsubscribe.

Equifax’s mess this spring is just one we know about, thanks to a Wall Street Journal investigation that forced the company to admit its mistakes.

If all of this sounds familiar, it might be because Equifax also revealed in 2017 that hackers had exploited a security flaw in its system to access the data of 145 million people, or about half the country. . Oops…

The errors are so numerous that in 2019, Equifax CEO Mark Begor told the New York Times that when he first checked his own report, it showed he had purchased a vacuum cleaner that he did not have a mobile phone service that he had not signed. and a credit card he didn’t have.

LOWER RESULT

Credit data is being used more broadly than it was originally, sometimes quite carelessly, consumer advocates warn.

“Credit scores are increasingly being used as a measure of character, when sometimes it’s just luck,” said Chi Chi Wu, an attorney at the National Consumer Law Center.

The pandemic has further called into question the reliability of the data. People and businesses that struggled to pay their bills on time during shutdowns and layoffs that were well beyond their control may have seen their creditworthiness suffer through no fault of their own.

How can such a flawed system be so powerful?

Again, no one can opt out, so the consumer base is on board. For-profit companies have no incentive to provide real service to consumers.

“One of the reasons why [errors] continues to happen is that they can get away with it – they’re an oligopoly, you can’t choose between them like you can with mobile operators, says Wu.

All a consumer can do in the current system is to challenge any error, which relies on consumers knowing their rights and wading through the daunting mud of their own dealings. Oh, and be prepared to wait because there is a huge backlog of such complaints, says the CFPB.

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