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Peloton to end in-house manufacturing after post-pandemic crash

Few companies have fallen as far, as quickly, as Peloton. The home bike business was booming during the early days of the pandemic when many people were stuck at home and bought the bikes.

However, once the lockdown phase of the pandemic ended, Peloton couldn’t keep up with the momentum. This led to its CEO resigning in February and the company raising subscription prices in April. Shares of the company have plunged 92% in just one year.

Now, Peloton has announced another big change: it’s getting out of in-house manufacturing of its products. The company will expand its relationship with one particular supplier, Taiwanese manufacturer Rexon Industrial Corp.

The goal of the deal, the company said in a statement, was to “simplify its supply chain and focus on technology and best-in-class content to continue to drive the business forward as world leader in connected fitness”.

“Today, we are taking another important step in simplifying our supply chain and reducing our cost structure – a key priority for us. We believe that this, along with other initiatives, will allow us to continue to reduce the cash burden on the business and increase our flexibility,” Peloton CEO Barry McCarthy said in the statement.

“By partnering with industry-leading third-party providers, 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,” he continued.

“We are excited to extend our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience,” Andy Rendich, Peloton’s supply chain manager, said in the statement. “Rexon has worked 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 continuing to play a key role in our engineering and manufacturing strategy,” he said. he adds.

There has been a lot of speculation that Peloton could be an acquisition target. Blackwells, an activist investor in the company, had lobbied earlier this year for the company to consider a sale, as well as for the CEO’s firing which eventually happened.

“Despite the company’s indisputable mismanagement, Peloton has a large and loyal customer base, skilled employees, quality technology and content, and a respected brand. A self-sustaining Peloton, however, will continue to be unable to fully exploit the opportunities its assets and brand enable – especially now with a stressed balance sheet, significant cash burn and loss of investor confidence,” Blackwells said in a January letter. .

“The board should immediately begin exploring these strategic alternatives and find a true owner of Peloton who can get the most out of its coveted employees, customer base, technology and brand,” Blackwells demanded.

Stephen Silver, technology editor for The National Interest, is a journalist, essayist and film critic, who also contributes to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and connect today. Co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver.

Picture: Reuters.