Peloton is slashing around 400 jobs globally as part of a restructuring initiative, as CEO Barry McCarthy steps down.
The move is part of ongoing efforts to revitalize the company’s business.
Peloton has been undergoing a major rebranding since last year.
It has transitioned from a luxury exercise equipment seller to a broader health technology brand.
During the COVID-19 pandemic, the New York-based company saw a surge in sales as lockdowns boosted demand for its high-end bikes and treadmills.
Customers paid monthly fees for access to interactive workouts, propelling the company’s share price to increase over fivefold in 2020.
However, as vaccines became widespread in 2021 and people began returning to gyms, Peloton’s sales momentum slowed.
Financial struggles have marked recent times for Peloton.
The company reported a loss of $1.26 billion for the fiscal year ending in June and an additional $350 million loss over the following six months.
By the end of fiscal 2023, its free cash flow was negative $470 million.
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The losses persisted into the third quarter, with Peloton losing $167.3 million, or 45 cents per share.
Job cuts represent about 15 percent of global workforce
This was an improvement over the previous year’s $275.9 million loss but still fell short of the anticipated 39 cents per share loss expected by analysts, according to Zacks Investment Research.
Revenue for the quarter was $717.7 million, just below the expected $719.9 million.
The company has revised its revenue forecast for the full year downwards by $25 million, estimating it will fall between $2.675 billion and $2.7 billion, a decrease from last year’s $2.8 billion.
Peloton Interactive Inc. announced that the job cuts represent about 15 percent of its global workforce.
The restructuring, including the closure of retail showrooms, aims to reduce annual expenses by over $200 million by the end of fiscal 2025.
These job reductions add to previous layoffs, with about 500 jobs cut in October 2022 and nearly 800 in August of the same year.
Despite stepping down as CEO and president, McCarthy will continue to serve as a strategic adviser until year-end.
In a memo to the Peloton team, 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.”
With McCarthy’s departure, Karen Boone and Chris Bruzzo will act as interim co-CEOs, and board member Jay Hoag will take over as chairperson, as the company searches for a new CEO.
