Peloton will cut approximately 500 jobs in yet another round of layoffs, while also exploring a potential sale of Precor. Chief Executive Officer Barry McCarthy has given Peloton six months to turn things around before they are forced to pursue an acquisition.
The Wall Street Journal first reported the news this morning, including an interview with McCarthy:
Mr. McCarthy said that the latest cuts mark Peloton’s final significant move to reduce its operating footprint and that executives would now focus on increasing revenue. He said the cuts are companywide but would be heaviest in its marketing operation, which he said is too big for a company of Peloton’s size.
“There comes a point in time when we’ve either been successful or we have not,” Mr. McCarthy said in an interview.
“If we don’t grow,” he said, before pausing. “We need to grow to get the business to a sustainable level.”
This is Peloton’s fourth round of layoffs this year and amounts to the elimination of approximately 12% of their remaining workforce. Peloton cut 2800 jobs back in February as founder and former CEO John Foley stepped down; this was followed by an additional round of layoffs in August. Since June, Peloton has cut approximately 600 jobs that weren’t originally disclosed due to “retail store closings, attrition and other moves.”
McCarthy reportedly announced the latest round of layoffs to staff today via an internal memo, which was obtained by the Wall Street Journal:
“I know many of you will feel angry, frustrated, and emotionally drained by today’s news, but please know this is a necessary step if we are going to save Peloton, and we are,” Mr. McCarthy said in an internal memo to employees provided by the company.
This leaves Peloton with approximately 3,800 employees, less than half the number they employed at their peak in 2021. According to CNBC, McCarthy has declared this is the final round of layoffs: “’The restructuring is done with today’s announcement,’ he said. ‘Now we’re focused on growth.”
In addition, Peloton is reportedly exploring the sale of Precor, the commercial fitness equipment company they officially acquired in April of 2021 for $420 million. The acquisition provided Peloton U.S.-based manufacturing; however, earlier this summer Peloton announced that they would be outsourcing all manufacturing to third parties.
With this final phase of restructuring, McCarthy has given Peloton six months to prove they can stand on their own. While he has previously dismissed talk of an acquisition, this indicates Peloton may not have a choice in a matter of months.
Some have called for Peloton to explore an acquisition, including activist investor Blackwells Capital. Though there have been reports that companies such as Nike and Amazon may be interested, McCarthy had repeatedly stressed that he is focused on long-term growth rather than a potential acquisition.
Nonetheless, McCarthy maintained his optimism to the Wall Street Journal:
“The perception for a long time publicly has been that the business is failing,” he said. “I think that perception is out of alignment.”
…“I can see in the numbers the business starting to change course,” Mr. McCarthy said. “Which is part of what gives me confidence when I say that I think this is the last step in the process.”
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