Peloton is taking steps to curtail its costs and create a more efficient supply chain by ending all of its owned manufacturing operations.
Taiwan-based manufacturer Rexon Industrial Corp. will become the primary manufacturer of the hardware for the Peloton Bike and Tread product lines in an expansion of the companies’ current relationship. The New York-headquartered connected fitness company is also suspending operations at exercise gear company Tonic Fitness Technology, which it acquired in October 2019. Premarket trading for Peloton shares rose more than 6% on the news.
“Today we take another significant step in simplifying our supply chain and variablizing our cost structure — a key priority for us,” said Barry McCarthy, Peloton CEO in a statement. “We believe that this, along with other initiatives, will enable us to continue reducing the cash burden on the business and increase our flexibility. Partnering with market-leading third-party suppliers, Peloton will be able to focus on what we do best — using technology and content to help our 7 million members become the best versions of themselves.”
These latest moves come during a year of change at Peloton. In February 2022, amid financial challenges, the company appointed McCarthy as its new CEO and President, in addition to bringing on Andy Rendich as its Chief Supply Chain Officer. Following the appointments, in March 2022, Peloton introduced a new pricing structure and subscription model for its workout equipment and on-demand classes under the name One Peloton Club.
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“We are thrilled to be expanding our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience,” said Rendich in a statement. “Rexon has been with Peloton for many years and is a proven partner for our global operations. We plan to maintain a significant corporate and manufacturing presence in Taiwan with over 100 Peloton Taiwan team members who continue to play a key role in our engineering and manufacturing strategy.”
