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Peloton to stop making fitness equipments in-house, cuts about 570 jobs
By Arghyadeep Dutta - Jul 12, 2022, 03:32 PM ET
Last Updated - Mar 11, 2024, 10:24 AM EDT
Peloton Interactive Inc (NASDAQ: PTON) on Tuesday said it would stop in-house production of its bikes and treadmills and is moving its hardware manufacturing to Taiwanese company Rexon Industrial Corp to simplify its operations and reduce costs
• CEO McCarthy said this step will simplify supply chain and fix cost structure, a top priority for Peloton
Exercise equipment maker Peloton Interactive Inc (NASDAQ: PTON) on Tuesday said it would stop in-house production of its bikes and treadmills and is moving its hardware manufacturing to Taiwanese company Rexon Industrial Corp to simplify its operations and reduce costs.
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The New York-based company will suspend its operations at its manufacturing facility, Tonic Fitness Technology Inc, through the remainder of 2022.
Peloton will also cut around 570 jobs at Tonic, a Taiwan-based firm, which the fitness equipment maker bought in 2019, Reuters reported, citing a source familiar with the matter.
Shares of Peloton, which have lost about three-fourths of their value this year, jumped more than 3.5% in afternoon trade.
Under the new CEO, Barry McCarthy, the company is trying to cut costs and shore up capital this year after demand for its popular home fitness equipment faded as people returned to working out at gyms after the pandemic.
“We believe that this, along with other initiatives, will enable us to continue reducing the cash burden on the business and increase our flexibility,” McCarthy said.
He has also brought in former Amazon executive Liz Coddington as the company’s new chief financial officer.
In May, McCarthy warned that the company was “thinly capitalized” and that unsold inventory coupled with mounting costs pushed it into a significant quarterly loss.
Picture Credit: CNN
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