New York, USA – Peloton, the popular exercise equipment maker and online fitness course provider, has announced significant changes as part of its cost-cutting measures. The company revealed plans to lay off 15% of its workforce, totaling around 400 employees, and disclosed that its CEO, president, and board director, Barry McCarthy, will be stepping down after two years in the role.
McCarthy, a former CFO at Spotify and Netflix, was brought out of retirement in early 2022 following the departure of Peloton’s co-founder and then-CEO, John Foley, who left alongside a major cost-cutting initiative that resulted in 2,800 job cuts. Foley later resigned from his role as executive chair, along with co-founder and chief legal officer, Hisao Kushi, seven months later.
In the wake of McCarthy’s departure, Peloton is currently in the process of finding a successor. In the interim, the company’s current chairperson, Karen Boone, and director, Chris Bruzzo, will be serving as co-CEOs during this transition period.
Peloton made its initial public offering (IPO) in 2019 with a valuation of $6 billion, seeing a surge in demand during the pandemic as people turned to home exercise equipment. However, as pandemic restrictions eased, Peloton’s shares and market cap decreased significantly. At present, the New York-based company holds a market cap slightly above $1 billion.
Despite facing challenges, Peloton’s shares rose by 13.3% in pre-market trading following the announcement of cost-cutting measures. The company also revealed plans to reduce its brick-and-mortar retail presence and focus on international growth, aiming to reduce annual expenses by over $200 million by the end of fiscal year 2025.
Peloton’s recent financial reports showed a decline in revenue and paid app subscriptions, leading to a 21% decrease in subscriptions compared to the previous year. The company’s second-quarter results in February resulted in a 24% drop in shares following the announcement of revenue declines and a bleak outlook for the future.
Overall, Peloton is undergoing significant changes to adapt to evolving market conditions and prioritize financial sustainability and growth. These strategic adjustments aim to position the company for long-term success in the competitive fitness industry.