December 2, 2022

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Peloton ditches owned-manufacturing, outsources equipment to Taiwanese Rexon Corp.

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Top exercise equipment company Peloton will no longer be manufacturing its own products.

Peloton announced on Tuesday that it will exit all in-house manufacturing and expand its current relationship with Taiwanese manufacturer Rexon Industrial Corp.

Until now, Peloton products have been manufactured by Tonic Fitness Technology, a subsidiary company Peloton acquired in 2019. Plans to open domestic factories were being floated as recently as a year ago at the height of the brand’s popularity. However, a steep decline in sales has forced the company to pivot.

“The shift is a natural progression in Peloton’s strategy to simplify its supply chain and focus on technology and best-in-class content to continue driving the business forward as the leading global Connected Fitness company,” the company said in a Tuesday statement. “Rexon will become the primary manufacturer of the hardware for Peloton’s iconic Bike and Tread product lines. Along with this expanded partnership, Peloton will be suspending operations at its Tonic Fitness Technology, Inc. facility through the remainder of 2022.”

PELOTON SALES PLUMMET, SHARES SKID

“Today we take another significant step in simplifying our supply chain and variablizing our cost structure – a key priority for us,” Peloton CEO Barry McCarthy said 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.”

Peloton Interactive Inc. plans to replace its chief executive, cut costs and overhaul its board after a slowdown in demand caused the once-hot bike maker’s value to plummet. (Peloton)

Peloton thrived during the global pandemic with its social-focused messaging and internet connectivity. The company made money hand-over-fist selling both its exercise bikes and proprietary subscriptions to Peloton workout programming.

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The supply chain restructuring is not the only shake-up happening at Peloton.

The company’s Chief Financial Officer Jill Woodworth is stepping down from her role after serving at the fitness equipment giant since 2018.

Peloton Bike Screen Exercise Equipment

Activist investor Blackwells Capital LLC wants exercise equipment maker Peloton Interactive Inc. to fire its chief executive and consider selling itself to a fitness or technology company, two sources familiar with the matter said on Sunday. (Photo b (Ezra Shaw/Getty Images / Getty Images)

According to a filing with the Securities and Exchange Commission, Woodworth will provide consulting services on an interim basis through Sept. 13, 2022, and support the company in preparation for its fiscal year 2022 earnings report. 

During her time as a consultant, Woodworth will receive $62,500 per month. She will also continue to receive her base salary of $750,000 and be eligible to vest any outstanding equity awards, subject to her continued compliance with customary restrictive covenants and her timely execution of a release of claims. Following the end of the consulting period, Woodworth will be eligible for severance. 

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