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HomeBusinessPeloton, Seeking to Cut Costs, Will No Longer Make Its Own Bikes

Peloton, Seeking to Cut Costs, Will No Longer Make Its Own Bikes


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Peloton will stop making bikes and treadmills at its factories and outsource all of its manufacturing to an overseas company in a move to cut costs as it continues to stabilize after a pronounced comedown from its pandemic success.

Rexon Industrial, a Taiwanese company that already produces some of Peloton’s bikes and treadmills, will now become the company’s primary manufacturer, Peloton said on Tuesday.

The company achieved enormous success when people were stuck at home during the height of the pandemic, but has been upended as gyms have reopened across the country.

In February, Peloton’s chief executive, John Foley, stepped down and the company laid off 20 percent of its corporate work force. Its shares have plummeted nearly 75 percent since January. Even an episode of “Sex and the City,” which featured Chris Noth’s character having a heart attack after riding his Peloton bike, caused Peloton’s stock to drop.

Barry McCarthy, who was appointed chief executive in February, said he wanted to save Peloton $800 million annually as part of a turnaround effort.

In May, the company’s first earnings report since Mr. McCarthy took over, included over $200 million in write-downs and a 24 percent drop in revenue from last year. Membership was up only 5 percent from the previous quarter. “Turnarounds are hard work,” he wrote in a letter to shareholders in May.


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