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Peloton cancels planned $400M Ohio factory in frantic cost-cutting bid

Peloton has pulled the plug on a planned $400 million factory in Ohio as it scrambles to cut costs due to sagging demand for its bikes and treadmills, the company confirmed as part of its turnaround plan this week. The embattled fitness brand said it is “winding down the development of its Peloton Output Park (POP) manufacturing plan,” including its centerpiece manufacturing plant in Luckey, Ohio near Troy Township. The decision to cancel the plan marked a major about-face for Peloton, which began construction just last year on what would have been its first factory. As reported by The Post, Peloton previously delayed the factory’s planned opening from 2023 to 2024 due to a backlog of inventory. Peloton said its decision to cancel the factory would result in $60 million in restructuring capital expenditures. Additionally, the fitness brand is trimming its in-house warehouse and delivery operations and shifting toward third-party fulfillment vendors. A Peloton spokesperson thanked local officials in Ohio for their support and said the company will complete construction on the facility, with plans to sell the land and the building once it is built. “While we won’t be able to ultimately occupy the property, overall we not only had the opportunity to highlight the talent and resources Troy Township offers, but we also invested approximately $100 million in the area,” the company spokesperson told the Toledo Blade. The factory was projected to create more than 2,000 jobs for the area. see also “Obviously we’re disappointed that this is happening,” Doris Herringshaw, president of the board of commissioners in Woods County, Ohio, told the newspaper. Peloton shares surged in trading Tuesday after the company unveiled sweeping changes to its operations. Embattled co-founder and CEO John Foley exited his role and will become executive chairman. Additionally, the company is cutting about 20% of its corporate workforce, or roughly 2,800 jobs – though the layoffs will not impact its fitness instructors, who reportedly earn up to $500,000 per year. The Post reported that Peloton workers impacted by the layoffs were offered a year of free fitness classes, as well as cash severance and other measures meant to soften the career blow. Peloton said the restructuring efforts will “achieve at least $800 million of annual run-rate cost savings” once the cost-cutting plan is fully implemented. Despite its popularity and sizable user base, the company has yet to achieve profitability. Despite the positive reception from investors, Peloton’s stock has plunged compared to its peak in the early days of the COVID-19 pandemic. Demand for Peloton’s bikes and treadmills has slowed in recent months as gyms and other fitness facilities resume normal operations. Last month, CNBC reported Peloton was temporarily halting production of its bikes and treadmills due to a “significant reduction” in demand. Foley pushed back on that report at the time, though he did admit Peloton was “resetting our production levels for sustainable growth.”

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