Financial troubles at Peloton are forcing the company to lay off 2,800 employees across the globe and cancel plans to build a US factory. Its CEO has also resigned.
Peloton announced the layoffs as it struggles to maintain growth. With gyms closed and people stuck at home, the company experienced massive demand during the onset of the pandemic, but since then customer interest has failed to keep up with Peloton’s growth plans. (It also faced PR headaches over last year's recall.)
Although user subscriptions are still growing, Q4 revenue was up only 6% year over year, while Peloton posted a net loss of $439 million.
Peloton will reduce corporate staff by about 20%. The company is also winding down Peloton Output Park, a factory that was scheduled to churn out Peloton machines in Ohio by 2023.
“With regard to operations in the field, the company is reducing its owned and operated warehouses and delivery teams and expanding its commercial agreements with third-party logistics providers,” the company added. In return, Peloton expects to save at least $800 million in annual costs.
The other big change involves Peloton CEO John Foley. He's resigning from his position, although he’ll stay onboard as company executive chair. Peloton has tapped Barry McCarthy, a former chief financial officer at Spotify and Netflix, to lead the company.
Despite the cost-cutting measures, the company said: “Peloton's roster of instructors and breadth and depth of its content will not be impacted by the initiatives announced today.”
“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.