Peloton CEO Barry McCarthy is stepping down, the company said on Thursday, as it announced a 15 percent cut to its global workforce.
Shares of the company – hit by plummeting demand for its pricey home fitness products after a pandemic boom – rose 14 percent. Investors hope a new boss could turn around its fortunes.
Millions of Americans bought $1,500 Peloton fitness bikes in lockdown – causing shares to spike as high as $170 and giving the company a value of $45 billion.
But this morning shares were $3.22 – even after the spike when the news was released – making the firm once tipped to kill off gyms worth just $1.18 billion.
McCarthy, a former Netflix and Spotify executive, took the helm in 2022 from founder John Foley and has taken several steps to cut costs. The company is searching for a replacement.
The announcement of his departure comes as the company reveals it will be cutting its global workforce by 15 percent – or 400 employees.
It is not clear if it will affect any of Peloton’s instructors – some of which, such as Jess Sims, have huge followings.
Former Netflix and Spotify executive Barry McCarthy (left) will stand down as Peloton CEO
Peloton has millions of fans, who tune in to classes from instructors like Jess Sims – but its shares are now at lowest ever level as bosses admitted sales of bike equipment are slow
McCarthy also led Peloton’s rebranding push to a software-focused company, leaning on its exclusive content to drive subscriber growth to offset lower equipment sales.
The news leaves Peloton’s legion of fans wondering if the high-octane online classes will continue – or will their bikes end up as expensive clothes hangers.
Peloton chairperson Karen Boone and director Chris Bruzzo will serve as interim co-CEOs. In addition, the company named director Jay Hoag as the chairperson of the board.
The board has started a search process to identify the next CEO. The future of the company will be clearer after that.
‘Peloton has discovered that fitness trends come and go and staying ahead of the curve is incredibly difficult,’ Zak Stambor, senior analyst, retail and ecommerce at research firm Insider Intelligence said.
Peloton said it now also aims to pare its retail presence, potentially forcing it to again push back its goal of returning to positive cash flow.
‘This restructuring will position Peloton for sustained, positive free cash flow, while enabling the company to continue to invest in software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business,’ the company said.
The announcement comes as the company reveals it will be cutting its global workforce by 15 percent
Millions of Americans bought $1,500 Peloton fitness bikes during the pandemic but since then demand has waned
It has also taken several cost-cut measures such as changing bike prices, offering its products through third-party retailers, focusing on digital subscription plans and cutting jobs in an effort to return to profitability.
Still, demand for its equipment has remained weak as inflation-weary customers cut back spending due to elevated inflation and rising borrowing costs.
Peloton said on Thursday it expects connected fitness members for the full year to be between 2.96 million and 2.98 million members, 30,000 lower than a prior forecast.
Peloton has not made a profit since December 2020.
