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Peloton Cutting 2,800 Jobs

Peloton Cutting 2,800 Jobs

Peloton announced it would cut 2,800 jobs this week as sales of its pricey exercise equipment has seen a steep decline as more people had back to real gyms instead of staying at home.

The CEO of the company, John Foley, will step down from his position but remain Executive Chair. 

Barry McCarthy, an executive who has worked at Spotify and Netflix, has been named new CEO of the company.

"Peloton is at an important juncture, and we are taking decisive steps. Our focus is on building on the already amazing Peloton Member experience, while optimizing our organization to deliver profitable growth," said John Foley, Co-Founder of Peloton and newly appointed Executive Chair. "With today's announcements, we are taking action to ensure Peloton capitalizes on the large, long-term Connected Fitness opportunity. This restructuring program is the result of diligent planning to address key areas of the business and realign our operations so that we can execute against our growth opportunity with efficiency and discipline."

As a result of the initiatives announced, the company expects to:

  • Improve the economics of its hardware business. The company is winding down the development of its Peloton Output Park (POP) manufacturing plan. This will result in $60 million in restructuring capital expenditures, which is included in the company's revised full year guidance. In addition, Peloton will optimize its logistics network by reducing its owned and operated warehousing and delivery footprint, while scaling third party relationships.
  • Right-size the organization by enacting a workforce reduction. The workforce reduction will occur across nearly all business operations to streamline reporting structures and create clearer lines of accountability. This will result in the reduction of approximately 2,800 global positions. Corporate positions will be reduced by approximately 20%. 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.

Peloton's roster of instructors and breadth and depth of its content will not be impacted by the cutbacks.

Foley added, "These decisions, particularly those related to our impacted Peloton team members, were not taken lightly. We greatly value the contributions of our talented colleagues and are committed to supporting impacted team members in their transitions. We thank our global team members for their focus and dedication through this process."

Laid off employees will receive cash severance and one year Peloton subscription included.

The company said layoffs will help reduce expenses by up to $800 million annually.