Peloton Cutting Almost 3,000 Jobs And CEO Stepping Down
A year full of woes is forcing Peloton to take drastic measures to stabilize its business.
This article is more than 2 years old
Peloton’s CEO, John Foley, announced that he’d be stepping down from his current position earlier this week. Taking his place is Spotify’s former CFO, Brian McCarthy. This power transfer comes after Peloton’s sequential months of declining sales, leading to the bike company slashing thousands of jobs.
To cut costs during Peloton’s swift sales decline, the company removed about 2,800 jobs. This staggering number of terminations is 20% of the company’s entire workforce. After an explosive demand for the bike company’s futuristic cardio product, the reopening of gyms has diminished an overall need for at-home workout devices.
The job cuts from Peloton also came with significant reductions to its other developments. A Peloton Output Park, a factory in Ohio that would manufacture more treadmills and bikes, is being shut down permanently. The factory would cost the company $400 million to run, a price it could no longer afford with detrimental sales. Peloton is scaling back on all its potential plans for new factories nationwide.
With Peloton’s universal success in 2020, it’s shocking to see its popularity suddenly shatter. In 2021, the company’s net worth reached a record-breaking $50 billion. As of February 2022, Peloton’s net worth dropped astronomically to $9.8 billion. A decrease in orders of the company’s bikes during statewide reopenings last year affected the overall demand for workout products.
This past Monday, shares of Peloton’s stock declined alongside its net worth. Its stock shares dropped by 8.7% to $27.11. This is an 18% drop in its share price from last quarter’s.
Pressure from external forces pushed Peloton’s removal of its former CEO. Blackwell Capital, a company with less than a 5% stake in the treadmill company, called on Peloton to replace its CEO due to decimated sales. Blackwell stated that it wasn’t necessarily a post-quarantine issue but a great product that was being mishandled. The investment firm pushed Peloton to hire a new CEO or have a stronger tech company acquire the brand.
Various PR nightmares haven’t helped the company with sales either. Last year, numerous reports of injuries from using Peloton bikes flooded news sources everywhere. The company’s unfortunate handling of a young child dying on a treadmill turned many loyal customers against the brand, feeling like Peloton didn’t take adequate accountability. After a few months, the struggling business finally recalled the Tread+ in May 2021.
Even in a fictional setting, the Peloton bikes are displayed as profoundly unsafe. Last December, Mr. Big, a character from the newest Sex And The City series, died of a heart attack after an extended workout on Peloton equipment. The company worked with HBO Max on utilizing the product for a scene but was not notified of the full extent of its involvement in Mr. Big’s death. Unfortunately, the product placement did nothing to bolster the company’s image following months of injuries from bike consumers.
Other than extensive budget cuts, Peloton’s new CEO has yet to make statements on further improvements of bike equipment. Calls for selling the company have mostly gone unanswered, with company executives hoping these demands will quell under present-day management. The bike retailer will have to figure out a way to market its bikes to consumers ditching the product for gym memberships.
