Peloton outsources all manufacturing as part of its transformation efforts
Peloton Interactive Inc. logo. On a stationary bike at the company’s showroom in Dedham, Massachusetts, US, on Wednesday, February 3, 2021.
Adam Glanzmann | Bloomberg | Getty Images
Peloton said Tuesday that it plans to exit all of its internal manufacturing operations and instead expand its existing relationship with Taiwanese manufacturer Rexon Industrial, in an effort to turn around the money-losing business.
This is a move for the company to streamline its supply chain and reform its cost structure, which is a top priority, said Barry McCarthy, Peloton CEO.
“We believe this, along with other initiatives, will enable us to continue to reduce the cash burden on business and increase our resilience,” McCarty said in a statement.
Peloton shares were down about 2% in premarket trading on the news.
Peloton said that Rexon is now set to become Peloton’s main manufacturer Bike and tread machines. The company will also suspend operations at the Tonic fitness facility until the remainder of 2022. Peloton acquired Tonic in October of 2019.
McCarthy, a former Spotify and Netflix executive, was appointed CEO of Peloton in early February, replacing founder John Foley. He took charge as the company’s expenses spiraled out of control and the demand for related fitness equipment waned.
At the time of the C-suite change, Peloton announced that it would cut nearly $800 million in annual costs. This included eliminating 2,800 jobs, or about 20% of corporate positions.
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