Peloton announced on Thursday that CEO Barry McCarthy will be stepping down as the company, and that it is also cutting 15% of its staff worldwide (or about 400 employees). Karen Boone and Chis Bruzzo, Peloton’s current board chair and director, respectively, will temporarily handle the CEO duties until a new leader is chosen. Another board director, Jay Hoag, has been named the new chair, and McCarthy will stay with Peloton as a strategic advisor for the rest of 2024.
The announcement was made ahead of revealing its 2024 third-quarter financial report Thursday morning, after which shares slid 12%, to $2.81. The job cuts are just the latest round for the company, which announced in October 2022 that it was cutting about 500 jobs on top of the nearly 800 layoffs it made in August of that year. Peloton also said it will also close some retail showrooms while it consolidates resources.
Peloton said in a letter to shareholders: “Today we are announcing a new restructuring program to reduce annual expenses by more than $200 million. The objective of the cost reductions is to align our cost structure with the current size of our business and position Peloton to generate sustained and meaningful positive free cash flow, which is a top priority for us.”
In a message to employees, McCarthy said the layoffs were unavoidable in streamlining costs and making Peloton profitable again. The statement said in part: “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. The company had to do that in order to generate sustainable positive [free cash flow]. Achieving positive FCF makes Peloton a more attractive borrower, which is important as the company turns its attention to the necessary task of successfully refinancing its debt.”
The New York-based fitness company experienced incredible sales growth during the height of the COVID-19 pandemic, with shares multiplying by more than five times in 2020 amid lockdowns. However, sales began to slow in 2021 as vaccines allowed people to come out of quarantine and begin to visit gyms and exercise establishments outside of the home.
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