New York, NY – Peloton’s CEO, Barry McCarthy, has announced his decision to step down as the popular exercise bike maker implements a restructuring plan aimed at reducing its workforce by 15 percent. McCarthy, a former executive at Netflix and Spotify, took over the role from the company’s founder, John Foley, in 2022. Despite being enticed out of retirement with a hefty pay package initially valued at $168 million, McCarthy faced challenges in reviving the company’s fortunes as its stock price failed to recover to pre-pandemic levels.
Peloton’s market capitalization has plummeted to around $1.2 billion from a peak of nearly $50 billion in early 2021, a significant decline that underscores the company’s struggles in the wake of the COVID-19 pandemic. The company experienced a surge in sales during lockdowns but has seen a downturn as restrictions eased, allowing people to return to gyms and fitness studios.
In a recent quarterly report, Peloton revealed a 4 percent drop in total revenue, with sales of connected fitness products such as bikes and treadmills sinking 14 percent. Subscription revenue, which now makes up 61 percent of the company’s total revenue, saw a 3 percent increase, but there are signs that customer engagement is waning, as evidenced by a 21 percent decline in paid app subscriptions from the previous year.
To address its financial challenges, Peloton announced plans to reduce its workforce by 400 employees, cut costs related to retail showrooms and marketing, and focus on generating positive free cash flow. McCarthy will transition into a strategic advisor role until the end of the year, with interim co-chiefs Karen Boone and Chris Bruzzo leading the company in the interim.
Despite the company’s efforts to stabilize its operations and finances, Peloton shares initially surged by 18 percent before dropping 9 percent in afternoon trading. Moving forward, Peloton aims to find a new leader who can drive the company’s next phase of growth, with a focus on achieving sustained positive free cash flow and implementing cost-saving measures to ensure long-term financial stability.