Peloton deepens footprint in workout market

With no sign that home workouts will fade out any time soon, Peloton, the maker of high-end stationary bikes with accompanying monthly subscriptions, has recently cranked up its manufacturing capacity in a big way, and it picked up a bunch of new fans on Wall Street.

It announced that it will spend US$420 million to acquire Precor, a company whose fitness machines populate hundreds of commercial and hotel gyms.

The acquisition, Peloton’s biggest to date, gives the company its first manufacturing capacity in the United States, its biggest market, during a global pandemic that has people cancelling gym memberships and seeking ways to stay fit in the safety of their own homes.

Last week, shares of Peloton Interactive Inc spiked 12 per cent to an all-time high.

The ability to churn out its bikes as demand exploded this year has been a challenge for the New York City company. The phrase “manufacturing capacity” came up no less that eight times during its earnings conference call last month.

After reporting that sales surged more than 230 per cent in its first quarter, shares tumbled more than 25 per cent after the company warned in that call that it would face supply constraints “for the foreseeable future”.

The Precor deal will go a long way towards addressing those constraints.

Precor has 625,000 square feet of US manufacturing capacity with in-house tooling and fabrication, product development, and quality assurance capabilities in Whitsett, North Carolina, and Woodinville, Washington.

Peloton can control the entire production process from design to shipping and increase total production scale, while being better able to maintain a high level of product quality.

AP