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Business

Peloton slashing 500 more jobs in bid to ‘save’ company

By
Reuters
Published Oct. 6, 2022
Updated Oct. 6, 2022, 5:30 p.m. ET

Peloton Interactive is planning to cut about 12% of its workforce in what will be its fourth round of layoffs this year to “save” the fitness equipment maker, according to a memo sent to its staff Thursday.

The company’s latest move to lay off 500 global jobs also marks its final step of restructuring, which began under the watch of Barry McCarthy, who took over as Peloton’s chief executive officer in February.

“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,” McCarthy said in the internal memo seen by Reuters.

On Thursday, the Wall Street Journal reported that McCarthy said the company has “six months to prove it can survive on its own.” Peloton issued a press release saying disputing that.

“If my comments to the WSJ suggested otherwise, then I misspoke, as that is simply not true,” he said in the release.

CEO Barry McCarthy and wife Valerie
Barry McCarthy took over as Peloton CEO in February. Getty Images

Peloton was one of the biggest beneficiaries of COVID-19 lockdowns as its connected exercise bikes and treadmills became all the rage among stuck-at-home fitness enthusiasts.

However, the pandemic-induced momentum in sales soon petered out with the reopening of gyms and fitness centers, pushing the company into a string of quarterly losses and forcing it to take drastic measures to cut costs.

Peloton said in February it was cutting about 2,800 jobs to revitalize sagging sales and win back investor confidence. That was followed by the cutting of 570 jobs in its Tonic Fitness Technology unit in July and 800 jobs at the company in August.

The company had 3,723 individuals in the United States and 857 internationally as of June 30, according to a 10K filing.

“The bulk of our restructuring work is complete,” McCarthy said. “We are eliminating these positions and reducing other operating expenses, in order to reach break-even cash flow by year-end FY23.”

However, GlobalData Retail managing director Neil Saunders is not willing to buy the restructuring story yet.

While the layoffs might help cut losses in the quarters ahead, on their own they are unlikely to transform the fortunes of Peloton, Saunders said.