Peloton is cutting about 400 jobs worldwide as part of a restructuring effort and its CEO Barry McCarthy is stepping down after two years as the company continues to work to turn around its business.
Shares jumped more than 11% before the market opened Thursday.
Peloton has been working on a significant rebranding since last year, shifting its identity from a seller of exercise bikes and luxury equipment to health technology for all.
The New York-based company saw incredible sales growth during the height of the coronavirus pandemic. Its share price rose more than five-fold in 2020 amid lockdowns that made its expensive bikes and treadmills popular with customers who pay a monthly subscription to participate in interactive workouts.
But sales began to slow in 2021 as vaccines allowed people to move more freely from home, including to the gym.
The company lost $1.26 billion in the fiscal year ended June and another $350 million in the six months ended December. Free cash flow, or the money left after paying the company’s operating costs, was negative $470 million in fiscal 2023.
Peloton Interactive Inc. said Thursday that the job cuts amount to about 15% of its global workforce. The restructuring efforts, which are expected to reduce its annual expenses by more than $200 million by the end of fiscal 2025, also include the continued closure of retail showrooms.
The job cuts are just the latest wave of job cuts for the company, which announced in October 2022 that it would cut about 500 jobs on top of the nearly 800 layoffs made in August of that year.
McCarthy, who is also stepping down from his roles as president and board member, will remain with Peloton as a strategic advisor through the end of the year.
McCarthy had succeeded founder John Foley as CEO to turn around a company that had suffered numerous failures, from marketing missteps to recalls. During his tenure, he pushed hard to shift Peloton’s focus from expensive hardware to software and a paid app.
In a memo sent to the Peloton team this morning, McCarthy said the recently announced job cuts were a moment to “face the world as it is, not as we want it to be.”
“As difficult as the decision to make additional workforce reductions was, Peloton simply had no other way to align its expenses with its revenues,” he wrote.
Peloton said President Karen Boone and Director Chris Bruzzo will serve as interim co-CEOs while a search is underway for its next CEO. Board member Jay Hoag will become the new president.
ABC News
