Peloton, the struggling exercise-equipment company, announced on Tuesday that it would no longer manufacture its own fitness equipment. Taiwanese company Rexon Industrial Corp. will become its primary manufacturer.
"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 statement.
Peloton is also shutting down its Tonic Fitness Technology facility in Taiwan through the rest of the year, after buying the manufacturer in 2019.
The announcement comes five months after John Foley stepped down as CEO of the company and it scrapped plans to build its own $400 million factory in Ohio. Peloton also laid off 2,800 employees in February
Experts have told Insider that Peloton is experiencing a "bullwhip effect": After ramping up manufacturing, it failed to foresee declining demand before it was too late, and is now in cost-saving mode.
Analysts with the Wall Street firm Baird wrote in February that Peloton "needs to provide a credible framework for shifting to a profitability-at-all-cost strategy aimed at cutting excess spending."
In Tuesday's announcement, CEO Barry McCarthy said that the move was "another significant step in simplifying our supply chain and variablizing our cost structure – a key priority for us."
