Peloton, the troubled exercise equipment company, is replacing its chief executive and planning to axe 2,800 jobs as it deals with a post-pandemic sales crash.
Co-founder John Foley, who has led the company for its entire 10-year existence, will step down as chief executive and become executive chair while the company will cut about 20% of corporate positions. Laid off staff will receive a year’s free membership with Peloton as well as a “meaningful cash severance allotment”.
The move, first reported in the Wall Street Journal, comes weeks after activist investor Blackwell Capital called for Peloton to fire Foley and explore a sale of the company. Amazon and Nike have reportedly expressed interest.
Barry McCarthy, former chief financial officer of Spotify and Netflix, will become chief executive and president and join Peloton’s board, according to the Journal.
Peloton became one of the highest-profile successes of the pandemic as people canceled gym memberships and bought its exercise bikes and treadmills to work out at home.
Investors snapped up shares and the company was valued at $50bn in January 2021. But as the pandemic waned, sales slipped and a series of incidents left the company’s shareholders feeling jittery.
Last May, Peloton recalled its two treadmills after the death of a child and dozens of other injuries.
In November, the company reported sales in 2022 will be up to $1bn lower than expected. In December, Peloton’s shares collapsed again following the on-screen death of the Sex and the City character Mr Big while riding a Peloton in the series reboot, And Just Like That.
On Tuesday the company reported it had lost $439m in its most recent quarter, and lowered forecasts for revenue, subscriptions, and profitability for the year. Peloton hopes to cut costs by $800m over the year and will wind down the development of a $400m factory in Ohio, the company’s first dedicated Peloton factory in the US and a site that Peloton hoped would create 2,000 jobs in the region. Shares in the company surged about 25% on Tuesday.
“Our objective is clear: we are taking steps to best position Peloton for sustainable growth, while also establishing a clear path to consistent profitability,” Foley wrote in a letter to shareholders. “Decisions like these were not taken lightly, and we will work hard to assist impacted teammates with their transitions.”
Peloton is currently valued at about $9bn, having risen in value on speculation of a takeover. Blackwells Capital was unimpressed by the news and said the company’s moves “do not address any of Peloton investors’ concerns”.
