Peloton announced on Thursday that Barry McCarthy, the CEO, will step down and the company will cut 15% of its staff. This decision was made because Peloton needed to spend less money to match its earnings.
McCarthy, who used to work at Spotify and Netflix, will still help Peloton until the end of the year. Karen Boone and Chris Bruzzo will be the temporary co-CEOs, and Jay Hoag will be the new chairperson of the board. Peloton is looking for a new CEO.
The company also shared plans to restructure. They will reduce their global staff by 15%, which means about 400 people will lose their jobs. Peloton will also close some of its stores and change how it sells internationally.
Peloton explained that these changes will help them spend less money and match the size of their business. They expect to save more than $200 million each year by 2025.
Peloton’s stock went up by more than 12% before the stock market opened.
McCarthy became Peloton’s CEO in February 2022, taking over from the company’s founder, John Foley. In the last two years, he worked on restructuring the business to make it grow again.
Since McCarthy started, he made big changes like cutting jobs, closing fancy stores, and focusing more on the Peloton app. The app offers classes to people who might not want to buy Peloton’s expensive bikes or treadmills.
McCarthy told Peloton staff that they had to cut jobs because the company couldn’t make enough money with its current spending. Peloton hasn’t made a profit since December 2020 and has a lot of debt.
Making a profit will make Peloton more attractive to lenders. So, the company is working on a plan to pay off its debt with the help of banks like JPMorgan and Goldman Sachs. They’re focused on finding a way to pay back their loans at the right time.
Peloton made a big announcement on Thursday. Barry McCarthy, the CEO, is leaving, and the company will let go of 15% of its staff. They’re doing this because they need to spend less money compared to what they earn.
McCarthy, who used to work at Spotify and Netflix, will still help Peloton for a while. Karen Boone and Chris Bruzzo will be the temporary co-CEOs, and Jay Hoag will be the new chairperson of the board. Peloton is looking for a new CEO. The company is also changing things up to save money.
They’ll cut 15% of their staff worldwide, which means about 400 people will lose their jobs. They’ll also close some stores and change how they sell internationally. Peloton says these changes will help them spend less and match their business size. They think they’ll save over $200 million each year by 2025.
Peloton’s stock went up by more than 12% before the stock market opened.
Boone thanked McCarthy for his work in a statement. She said he joined Peloton when it was facing tough times. During his time as CEO, he helped make the business more stable and get more money coming in.
Boone and Bruzzo said they’re ready to work closely with Peloton’s leaders to keep things going smoothly while they look for a new CEO. Peloton also shared its financial results for the third quarter of the fiscal year. They didn’t do as well as Wall Street expected:
– They lost 45 cents per share, while experts thought they’d lose 37 cents.
– They made $718 million in revenue, but experts expected $723 million.
Peloton’s net loss for the quarter was $167.3 million, compared to $275.9 million a year ago. Their sales dropped by about 4%. Peloton has been trying many things to increase sales, like removing the free option from its fitness app and partnering with big brands like Lululemon. But none of these efforts have helped much.
For the ninth quarter in a row, Peloton’s sales were lower than the year before. They haven’t made a profit since December 2020. Peloton lowered its expectations for this fiscal year. They expect fewer people to subscribe to their fitness services and less revenue.
They think they’ll make about $2.69 billion in revenue, down from the expected $2.71 billion. However, they did increase their expectations for gross margin and adjusted EBITDA, which is a measure of profit. They expect their profit margins to improve, thanks to lower spending and the changes they’re making.
McCarthy had aimed to make Peloton grow again within a year, but that hasn’t happened. He now hopes it’ll start growing again by June. He also wanted Peloton to start making more money by June, which it did during the third quarter. Peloton has struggled to make enough money from selling its equipment, which is expensive to make.
Since the pandemic ended, fewer people have been buying Peloton’s bikes and treadmills. McCarthy made big cuts to Peloton’s workforce shortly after he became CEO. The latest round of layoffs, affecting 500 people, was in October 2022. He said then that Peloton was done cutting jobs and was focusing on growing.
