A once fan favorite is now falling in ranks fast—Peloton CEO has given the company six months to save itself.
- Peloton took off during the pandemic while people were stuck in their house and fell in love with the stationary exercise brand.
- Now that restrictions have lifted and people aren’t locked down Peloton is falling—and fast.
- Company CEO Barry McCarthy says Peloton has six months to get it together or it is unlikely it can be a stand-alone business.
Why it’s news
The pandemic was good for Peloton, as people turned to at home workout options.
In 2020, the home fitness company reported a 172% jump in sales, more than 1 million subscribers to its streaming classes, and more than 350% jump in stock price, according to a 2020 CNN Business article.
Now that people aren’t confined to their homes Peloton is losing money pretty quickly. The company has gone down more than 75% in value this year alone.
In an attempt to save the company Pelton has resorted to cutting jobs. The company has already suffered three rounds of staffing cuts and is now planning to do a fourth round cutting another 500 jobs or about 12% of remaining workers.
McCarthy said he is giving the company six months to turnaround or it will not likely be a stand-alone business.
After the coming job cuts Pelton will have around 3,800 employees—a big drop from its 8,862 employees last year. The job cuts are the company’s way of downsizing and attempting to focus on revenue.
“There comes a point in time when we’ve either been successful or we have not,” McCarthy stated in an interview.
Peloton has reported six straight quarterly losses, culminating in a $1.2 billion loss in the most recent quarter according to Wall Street Journal writer Sharon Terlep.
The demand for the at-home equipment has dramatically decreased as people aren’t in their homes as much as they were during the pandemic, but McCarthy remains optimistic that Peloton can pull through this slump.
He said the company has cut costs by letting go of workers, outsourcing manufacturing, and beginning to sell equipment in retail stores.
Originally, Pelotons were only available in its own branded retail stores, but now the company has decided to branch out. The equipment will now be available at Dick’s Sporting Goods and Amazon.
“I can see in the numbers the business starting to change course,” said McCarthy. “Which is part of what gives me confidence when I say that I think this is the last step in the process.”