The 15% workforce cuts are part of a bigger cost-cutting initiative.
Peloton, an exercise equipment manufacturer and online fitness course provider, said that it is laying off 15% of its workforce (about 400 individuals) as part of cost-cutting efforts. The company also announced that Barry McCarthy, its CEO, president, and board director, will step down after two years in the position.
McCarthy, who had previously served as CFO at Spotify and Netflix, was coerced out of retirement in early 2022 when Peloton’s co-founder and then-CEO, John Foley, resigned after a massive cost-cutting initiative that resulted in the layoff of 2,800 people.
Although Foley continued in his role as executive chair, he and Hisao Kushi, the company’s co-founder and chief legal officer, both departed after seven months.
According to Peloton, the company is searching for McCarthy’s replacement. Karen Boone, the company’s current chairperson, and Chris Bruzzo, its director, will take over as co-CEOs in the meantime.
When the pandemic hit in 2019, Peloton’s stock price soared to $6 billion at the time of its IPO. The company’s bikes and online classes rushed off the shelves as people searched for methods to keep healthy with home exercise equipment while the world hunkered down at home. Eventually, by early 2021, its market valuation had reached $50 billion.
However, Peloton’s shares also returned to normalcy as the globe did, and in January 2022, a year after its high, its market capitalization dropped to $10 billion.
The market capitalization of the New York corporation is currently little over $1 billion. Nevertheless, in pre-market trading on Thursday morning, its shares rose as much as 13.3%, presumably helped by Peloton’s announcement that it will reduce expenses.
In addition to cutting 15% of its workforce, Peloton stated that it plans to further reduce its physical presence in retail showrooms and intensify its worldwide expansion through a more “targeted and efficient” go-to-market approach. By the conclusion of its fiscal year, all those actions should help it cut yearly spending by almost $200 million.
These comments coincided with Peloton’s release of less-than-expected Q3 2024 sales and loss figures as well as a 21% drop in paid app memberships over the previous year. Following the release of the business’s second-quarter results in February, which revealed ongoing revenue reductions and a dire outlook for the upcoming months, shares of the company fell 24% to an all-time low.
