Peloton plans to raise the price of some products, eliminate its North American warehouses, close stores and cut jobs as part of a cost-cutting strategy, the company said Friday.
The stationary bike maker, which has had runaway success during the pandemic only to fight excess inventory as people return to gyms, will cut around 784 jobs by shrinking its retail footprint and winding down its network last-mile delivery, relying instead on partners, he said in a statement. It did not specify how many of its 86 stores in North America it would close.
“These are tough choices because we impact people’s lives,” Peloton chief executive Barry McCarthy wrote in a memo to employees, which was seen by The New York Times. “These changes are critical if Peloton is ever to become cash flow positive.”
The company will release its fourth quarter results on August 25.
After lowering the price of some of its products in April, Peloton announced on Friday that it would increase the price of its Bike+ model by $500 and its Tread model by $800.
The company also set November 14 as the mandatory deadline for employees to return to the office at least three days a week.
Last month, Peloton announced that it would outsource its manufacturing to a foreign company. In February John Foley, one of the founders of Peloton, resigned as chief executive and was replaced by Mr McCarthy. The company laid off 20% of its workforce, or some 2,800 workers, that month.
The business peaked in demand in the spring of 2020, becoming a pandemic darling, before interest waned as gyms reopened. This year, Peloton temporarily halted production of its bicycles and treadmills, and its losses worsened.
Negative television portrayals also affected the stock price. In December, Mr. Big, a character on the revival show “Sex and the City,” died after working on a Peloton bike. Then a main character from the Showtime drama “Billions” had a heart attack while riding a Peloton bike in the show’s Season 6 premiere.
“Overall, I continue to be optimistic about Peloton’s future,” McCarthy wrote in his employee memo. “That doesn’t mean there won’t be challenges ahead. There will be, and there will be unforeseen setbacks. This is the nature of turnovers. But I am convinced that we can overcome the challenges.