Peloton CEO Barry McCarthy stepping down ahead of company-wide layoffs – as fitness bike sales slump
Peloton CEO Barry McCarthy is stepping down, the company said 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 that a new boss can turn the fortunes around.
Millions of Americans bought Peloton for $1,500 fitness cycling in lockdown – which creates shares peaking as high as $170 and giving the company a value of $45 billion.
But this morning, shares were at $3.22 — even off their peak when the news was released — once tipping the company to destroy gyms worth just $1.18 billion.
McCarthy, a former Netflix and Spotify executive, took over from founder John Foley in 2022 and has taken several steps to reduce costs. The company is looking for a replacement.
The announcement of his departure comes as the company announces it will reduce its global workforce by 15 percent – or 400 employees.
It’s not clear if this will affect Peloton’s instructors, some of whom, like Jess Sims, have a huge following.
Former Netflix and Spotify executive Barry McCarthy (left) will step down as CEO of Peloton
The peloton has millions of fans, tuning in for lessons from instructors like Jess Sims – but shares are now at an all-time low as bosses admitted cycling equipment sales are slow
McCarthy also led Peloton’s rebrand into a software-focused company, leaning on its exclusive content to drive subscriber growth and offset lower equipment sales.
The news has Peloton’s legion of fans wondering if the high-octane online classes will continue — or if their bikes will end up as expensive coat hangers.
Peloton Chairman Karen Boone and Director Chris Bruzzo will serve as interim co-CEOs. In addition, the company appointed director Jay Hoag as chairman of the board.
The board has initiated a search process to identify the next CEO. After that, the future of the company will become clearer.
“Peloton has discovered that fitness trends come and go and it’s incredibly difficult to stay ahead,” said Zak Stambor, senior retail and e-commerce analyst at research firm Insider Intelligence.
Peloton said it is now also looking to scale back its retail presence, potentially pushing the company back on its goal of returning to positive cash flow.
“This restructuring will position Peloton for sustainable, positive free cash flow, while enabling the company to continue investing in software, hardware and content innovation, improvements to the member support experience, and optimizations to marketing efforts to scale the business,” says Company. said.
The announcement comes as the company announces it will reduce its global workforce by 15 percent
Millions of Americans bought $1,500 Peloton fitness bikes during the pandemic, but demand has since waned
It has also taken several cost-cutting measures, such as changing bike prices, offering its products through third-party retailers, focusing on digital subscriptions and cutting jobs in an effort to return to profitability.
Still, demand for the equipment has remained weak as inflation-weary customers scale back their spending due to high inflation and rising borrowing costs.
Peloton said Thursday that it expects full-year fitness affiliates to be between 2.96 million and 2.98 million members, down 30,000 from a previous forecast.
Peloton has not made a profit since December 2020.