Peloton Interactive Inc. stationary bikes will be on display in the company’s showroom on Madison Avenue in New York, United States, on Wednesday, December 18, 2019.
Jeenah Moon | Bloomberg | Getty Images
Peloton said Monday it would invest $ 400 million to build its first factory in the United States to expedite the production and delivery of its popular bicycles and high-end treadmill machines.
After reviewing a number of locations, the company selected a 200 acre site in Troy Township, Wood County, Ohio, to add more than 1 million square feet of manufacturing, office and equipment space.
Peloton expects the groundbreaking ceremony for the project, which will create more than 2,000 jobs in the region, will take place this summer. The plant should be operational by 2023.
“We had planned this for years, but I think the pandemic has set an exclamation point as to why it’s going to be great,” said John Foley, Peloton’s co-founder and CEO, in an interview. “If we have more flexibility in running a global supply chain, we can sleep better, as you can imagine.”
The home fitness company currently manufactures its products in third-party facilities in Asia. Given increased consumer demand during the Covid pandemic, there have been lengthy delivery delays that have frustrated consumers and investors. In February it announced it would be spending more than $ 100 million to expedite air and expedited ocean shipments.
The company also acquired fitness maker Precor for $ 420 million and acquired manufacturing facilities in North Carolina and Washington. Peloton expects its bike and tread machines to be manufactured in these factories by the end of the year.
Potential customers can visit the Ohio facility to view their products or plan tours to see the bicycles and treadmills made, the company said. The site will also have a fitness center for its employees.
According to Foley, the additional space also means Peloton will have space to manufacture additional products in the years to come.
Earlier this month, Peloton recalled its two treadmill machines over safety concerns. The company’s cheaper model, the Tread, should go on sale in the US this week. However, the launch has been delayed to add new security features that could be available as early as this summer.
Meanwhile, Peloton continues to market its Bike and Bike +, which has a rotating screen for floor exercise, to consumers looking for ways to work up a sweat at home. Peloton will enter new markets and will launch in Australia later this year.
For the quarter ended March 31, total Peloton revenues increased 141% from $ 524.6 million a year ago to $ 1.26 billion. Peloton expects sales of $ 915 million for the current quarter.
“We believe that working out at home is the future,” said the CEO. “That’s why we’re investing in this facility.”
Peloton shares fell more than 1% Monday afternoon after falling about 35% since the start of the year. The company has a market capitalization of $ 30 billion.
– CNBC’s Diana Olick contributed to this coverage.