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13 Dec 2022
Peloton prepares Precor for sale, brings in turnaround specialist Dustin Grosz as interim CEO
BY
Liz Terry
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Precor is to become a wholly-owned subsidiary under Peloton
photo: Precor
Peloton has called a stop to its disastrous attempt to rebrand Precor as Peloton Commercial, announcing it will operate as Precor going forward and be constituted as a wholly-owned subsidiary of Peloton. VP of Peloton Commercial, Betsy Webb, is stepping down from the role she’s held since 2021 and will hand over to new interim CEO, turnaround specialist Dustin Grosz, on 6 January 2023.
The move is thought to be an indication that Peloton is preparing to beef up and eventually sell off Precor when the optimum price can be achieved.
The company has been without a CEO or president since the departure of Rob Barker in February this year and has been a relatively low priority for Peloton as it fought to become cashflow positive.
Grosz has around 30 years experience in the fitness equipment industry, including time as president and COO of Core Health and Fitness where he restructured the US$180m pa revenue business.
Peloton acquired Precor in 2021 at a time when its cash reserves were in the billions, paying US$420m for the business .
As well as acquiring Precor's extensive product portfolio, Peloton gained 625,000sq ft of factory space in the US, along with a 100-strong R&D team and a strong history of trading in the hospitality sector – a market Peloton was keen to penetrate.
This came at a time when Peloton was experiencing challenges keeping up with demand for its bikes due to pandemic lockdowns and needed to ramp up its manufacturing capacity in the US.
Barker, Precor’s president at the time, became CEO of Precor and general manager of Peloton Commercial.
The rationale for the purchase was quickly undermined, however, when gyms reopened, Peloton's sales declined and the company took the strategic decision to outsource all its manufacturing to Rexon, effectively removing the need to have Precor within its portfolio.
The rebrand to Peloton Commercial has not been a success and has impacted the Precor brand as Peloton's reputation has taken a series of knocks due to a management missteps.
The eventual sale of Precor would be in line with Peloton's current turnaround strategy, bringing cash into the business and enabling the company to focus management efforts on its core business.
Barker stepped down in February2022 from Peloton and Precor, investing in boutique fitness chain TRIB3 and taking the role of non-executive director.
Under Webb's leadership, the Peloton Commercial team – which includes former Hilton exec, Ryan Crabbe, who was responsible for Hilton's Five Feet to Fitness concept – did a worldwide deal with Hilton for the supply of Peloton bikes to its hotels, meeting at least one of the strategic outcomes that had driven the original purchase of Precor.
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