Peloton loses lawsuit against Lululemon in year of declining sales

A Manhattan judge on Thursday dismissed Peloton Interactive Inc’s year-long lawsuit against sports fashion brand Lululemon.

Peloton launched the lawsuit last November, after Lululemon accused the company of infringing on its wearable patents for its top-selling bra and leggings products. After sending a cease and desist letter, the fashion brand went on to sue Peloton.

Peloton then counterattacked, demanding a statement that it had not infringed on any trademarks. That countersuit has now been dismissed, meaning Lululemon’s trial will resume.

In federal court on Thursday, the judge described the countersuit as “an advance action that warrants dismissal,” reported Bloomberg.

Peloton declined to comment on the decision.

This litigation setback comes in what has been a turbulent year for the exercise bike maker. In February, Peloton chairman and co-founder John Foley resigned from his post in a move that also saw 2,800 company employees made redundant.

Less than a month ago, the company reported a $1.2 billion loss, sending stock prices plummeting as it posted its sixth consecutive quarter of losses.

Peloton’s share price has risen significantly during the pandemic as consumers turn to home fitness options. However, in the quarter ending June 30, 2022, Peloton saw a 28% decline in revenue, with sales falling to $678.8 million from $936.9 million the previous year.

In a statement to shareholders at the time, CEO Barry McCarthy said: “Opponents will look at our [fourth quarter] financial performance and see a falling revenue melting pot, negative gross margin and higher operating losses. They will say it threatens the viability of the business. But what I do see is meaningful progress that boosts our comeback and Peloton’s long-term resilience.

Last month, the company launched a desperate bid to restructure its distribution channels, selling products through Amazon US for the first time. It has now struck a deal with US retailer Dick’s Sporting Goods and will begin selling exercise bikes, treadmills and its line of accessories in stores across the country.

Further information on the legal cases can be found at Lululemon Athletica Canada Inc v Peloton Interactive Inc, US District Court, Central District of California, No. 21-09252; and Peloton Interactive Inc v Lululemon Athletica Canada Inc, US District Court, Southern District of New York, No. 21-10071.