Peloton to cut 400 jobs worldwide as chief executive steps down after two years

Peloton is cutting about 400 jobs worldwide as part of a restructuring effort

Peloton is set to cut around 400 jobs globally as part of a restructuring plan, with chief executive Barry McCarthy stepping down after two years at the helm.

The fitness giant has been undergoing a significant rebrand since last year, transitioning from a luxury exercise bike and equipment seller to a health tech provider for all. During the peak of the Covid-19 pandemic, the New York-based firm saw a surge in sales.

Its share price skyrocketed more than five-fold in 2020 due to lockdowns that made its high-end bikes and treadmills popular among customers who pay a monthly fee for interactive workouts. However, as vaccines rolled out in 2021 allowing people more freedom, including gym visits, sales began to slow.

The company reported a loss of $1.26billion in the year ending in June, with an additional $350million loss in the six months ending in December. Free cash flow, or the money left over after covering business running costs, was a negative $470million in 2023.

The company has reported a loss of $167.3 million for the third quarter, an improvement from the previous year’s loss of $275.9 million, but still falling short of analysts’ expectations. The company’s revenue totalled $717.7million, slightly below Wall Street’s estimate of $719.9million.

The fitness equipment and media company also reduced its full-year revenue guidance by $25million to a range of $2.675billion to $2.7billion, down from last year’s $2.8billion. Peloton Interactive Inc. announced on Thursday that it will be cutting approximately 15% of its global workforce.

These restructuring efforts are expected to reduce annual expenses by more than $200million by the end of 2025, and will include the continued closure of retail showrooms. These job cuts follow previous rounds of layoffs, with the company announcing in October 2022 that it was cutting about 500 jobs, in addition to nearly 800 layoffs made in August of that year.

Mr McCarthy, who is also stepping down from his roles as president and board member, will remain with Peloton as a strategic adviser until the end of the year. Mr McCarthy had taken over the CEO post from founder John Foley to right a business that had suffered from numerous stumbles, from marketing missteps to recalls.

During his tenure, he made a hard push to shift Peloton’s focus from high-priced hardware, to software and a fee-based app. In an early morning message to Peloton employees today, Mr McCarthy acknowledged the latest round of layoffs as a tough but necessary step, saying it was about “dealing with the world as it is and not as we want it to be.”

“Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue,” he explained in his note.

Peloton announced that Karen Boone, the current chairperson, along with director Chris Bruzzo, will take over as interim co-CEOs during the hunt for a permanent CEO. Meanwhile, board member Jay Hoag will step up as the new chairperson.