Peloton CEO steps down as beleaguered company cuts 15% of workforce

Barry McCarthy has stepped down as CEO of Peloton, the company said on Thursday, as it decided to cut 15% of its workforce to tackle a post-pandemic slump in demand for its connected fitness equipment.

In a note, McCarthy said: “Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue.”

McCarthy said Peloton was now “on the right path”. “You have a GREAT lead team, and although the stock market hasn’t recognized this yet, they will. It’s simply a matter of time,” he wrote.

Shares of the beleaguered New York-based company rose 8% before the markets opened as it also plans to cut back its retail presence, owing to weak demand that has forced Peloton to push back its goal of returning to profit.

Karen Boone, Peloton’s chairperson, and Chris Bruzzo, Peloton’s director, will serve as interim co-CEOs. In addition, the company named director Jay Hoag as the chairperson of the board.

The company’s board has started a search process to identify the next CEO.

The company’s sales had boomed during the pandemic as gyms closed and people tried to stay fit from home. Sales collapsed as the world reopened and McCarthy attempted to revamp Peloton as a subscription business and cut thousands of jobs. Once valued at over $50bn, the company is now worth $1.1bn.

McCarthy is a former Netflix and Spotify executive and joined Peloton in February 2022, replacing co-founder John Foley. Under McCarthy, Peloton tried numerous tactics to revamp its business. The company ended its app’s free membership option, expanded into corporate wellness and brokered deals with brands including Lululemon and Hyatt hotels.

But the losses have continued to mount. Peloton has not made a net profit since December 2020. On Thursday the company announced that revenues had fallen again in the last quarter, its ninth consecutive quarter of declining revenues.

For the three months ending on 31 March, Peloton lost $167.3m, down from $275.9m for the same quarter last year.

Reuters contributed to the story.