Indoor fitness brand Peloton is to stop manufacturing its bikes and treadmills in-house and within the US, and will instead outsource the process to Taiwan and existing partner Rexon.
The New York City-based brand saw booming sales in 2020 as the COVID-19 pandemic led to governments in key markets including the US and UK impose lockdown measures, leading people to undertake exercise at home.
Just 18 months ago, the company was one of the darlings of Wall Street as its share price, buoyed by soaring sales and the business going into profitability for the first time in its history, soared to nearly six times what it had been when it went public in 2017.
Ambitious growth plans were announced, including setting up a factory in Ohio to reduce its dependency on overseas suppliers.
The growth in sales and profits proved unsustainable, however – due also in part to increased competition in connected fitness – and turnover has crashed, with the company also back in the red, resulting in founder John Foley stepping down from his position as CEO.
The plans for that factory in the US have now been shelved, and the company has made thousands of US-based employees redundant.
> Peloton’s parting gift to 2,800 employees it just fired? A year’s free membership …
Floated on NASDAQ exchange in September 2019 with an initial share price of $29, Peloton shares hit a high of $162.72 on Christmas Eve 2020.
However, they are now trading at around one twentieth of that value, with shares trading at an all-time low of $8.42 at the time of writing.
To put that into context … you may remember the company’s 2019 pre-Christmas advert, which was widely slammed for being sexist.
> When ads backfire - what went wrong with THAT Peloton spot?
The 30-second spot showed a husband gifting a Peloton bike to his wife, who then dutifully rode it throughout the following 12 months before giving him a video the following Christmas showing her using it during the year.
A better present to him may have been buying him the equivalent sum in Peloton shares – $2,000 – that the bike would have cost him 12 months previously.
Those shares – assuming he’d held on to them – would be worth around $100 right now.
The company’s Chief Supply Chain Officer, Andy Rendich, put a brave face on its latest news, saying: “We are thrilled to be expanding our partnership with Rexon, a leading Taiwanese manufacturer with over 50 years of experience.
“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.”
CEO Barry McCarthy added: “Today we take another significant step in simplifying our supply chain and variablizing [No, really – ed] our cost structure – a key priority for us.
“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.”
Add new comment
17 comments
"simplifying our supply chain and variablizing"
Prime grade corporatespeak. Simplifying how? Verbal vomit that all but guarantees investor exodus. Written by none other than the PR experts, why do they exist again?
Funny how they blame their competition rather than world coming out of lockdown and being able to do things like go outside and back to the gym again - which of course is one of the driving factors behind their decline and lack of uptake of their services and equipment. How do you sell exercise bikes to people who have already got one or subscribed to the service? You just cant.
It was never a bubble that was going to last. They took a gamble ane expanded their operation and their gamble failed.
The most important thing is if they made enough hay while the sun shined
They're not "bikes"
Why not? Who are you to define what a bike is?
Perhaps something like this from a dictionary
vehicle with two wheels in tandem, handlebars for steering, a saddle seat, and pedals by which it is propelled?
Hmm... this could get complicated. I think we'll have "lumpers" and "splitters" at odds here.
That first picture is definitely a unicycle. I'd happily call the other two bikes.
Well, I think if you look at the dictionary definition of a bicycle, then they probably aren't. But then that's true of any exercise bike.
ROFL. The fact you've had to use the word bike prefixed with exercise pretty much makes my point.
Ooh, this is promising. I think we've exhausted the "what is a woman?" argument, so we need something else to bicker extensively about.
#ExerciseBikesAreBikes
SERB*
* Static Exclusionary Radical Bicyclist
TURBO Turbo Uninclusionary Radical Bicyclist Obviously
One of my friends has transitioned - he started with two wheels but has now become a turbo.
I'm aware of exercise bikes which are ridden on the road.
All the OP's comment shows is their odd fixation with wheels.
No balance or forward momentum.
No drivers trying to kill you.
Sorry, got that wrong, you still have to look out for drivers trying to kill you.
Imagine if you gave up riding on the roads because they are too dangerous so you get yourself a static bike and then that happened.
A quick trip into the "Cambrian explosion" era of leg-or-hand propelled transport would show that evolution is not fussed about categories.
https://onlinebicyclemuseum.co.uk/date_tax/1870/
https://en.wikipedia.org/wiki/Handcar
https://en.wikipedia.org/wiki/Draisine
There exist some fragmentary traces from the "precambrian era" too.
https://en.wikipedia.org/wiki/Stephan_Farffler
Throwing the net wider - things which may sometimes move but the main purpose is to move something else:
https://www.lowtechmagazine.com/2011/05/pedal-powered-farms-and-factorie...