Peloton to stop manufacturing bikes, protectors, cut about 570 jobs

Equipment manufacturer Peloton Interactive said on Tuesday that everything would stop own production his bikes and treadmills and outsource production to partners to simplify operations and reduce costs.

The New York firm will cut about 570 jobs in its Block Tonic Fitness Technologythe Taiwanese firm bought by Peloton in 2019, according to a source familiar with the matter.

Peloton did not immediately respond to a request for comment. The company will also suspend work at the facility until the end of 2022, it said in a statement earlier Tuesday.

Shares of Peloton, which have lost about three-quarters of their value this year, are up 2.8% to $9.17 in intraday trading.

The company, under new chief executive Barry McCarthy, decided this year to cut costs and raise capital after demand for its popular home equipment fell as people returned to working out at the gym.

He also brought in former Amazon.com Inc CEO Liz Coddington as Peloton’s new chief financial officer.

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McCarthy, a former chief executive of Netflix Inc, has now taken steps to expand Peloton’s alliance with Taiwan’s Rexon Industrial Corp, which will now be the main hardware manufacturer for Peloton’s product line.

“We believe this, along with other initiatives, will allow us to continue to reduce the cash burden on the business and increase our flexibility,” McCarthy said.

Once a pandemic darling, Peloton’s fortunes have plummeted following the easing of COVID restrictions and a surge in spending that led to bloated inventory and subscription cancellations.

McCarthy warned in May that the company was “undercapitalized” and that unsold inventory combined with rising costs resulted in large quarterly losses.

However, a $750 million five-year debt deal with JP Morgan and Goldman Sachs has assuaged some investor concerns.

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