Peloton cuts 500 jobs, has 6 months to show how it can grow, CEO says

Peloton cuts 500 jobs, has 6 months to show how it can grow, CEO says

A man walks in front of a Peloton store in Manhattan on May 05, 2021 in New York.

John Smith | Corbis News | Getty Images

Peloton has six months to show that its recent spate of strategy changes, including equipment rentals and partnerships with Amazon and Hilton, can help the company grow, CEO Barry McCarthy told CNBC on Thursday.

Peloton also plans to cut 500 jobs, or about 12% of its workforce, he said. The connected-fitness company has already had multiple layoff rounds this year, but McCarthy said he doesn’t expect any more job cuts any time soon. “We’re done,” he told CNBC.

Shares of the fitness-product company seesawed in premarket trading. The stock is down about 76% so far this year.

The developments Thursday mark a pivot point for Peloton. “The restructuring is done with today’s announcement,” McCarthy said. “Now we’re focused on growth.”

McCarthy has overseen drastic changes to Peloton’s business model this year as the company struggled with sales after a boom during the earlier days of the Covid pandemic. A former Spotify and Netflix executive, he has pushed the connected-fitness company’s business into subscriptions while broadening its products’ availability beyond Peloton’s direct-to-consumer roots.

Earlier this week, the company said it would put its bikes in every Hilton-branded hotel in the United States. It recently announced partnerships to sell equipment in Dick’s Sporting Goods stores and on Amazon.

McCarthy talked to CNBC after The Wall Street Journal reported on remarks he made about where the company could stand in six months.

“If we don’t grow,” McCarthy, who took over as CEO earlier this year from co-founder John Foley, told the Journal, “We need to grow to get the business to a sustainable level.” The Journal also first reported on the layoffs.

Beyond that point, though, the company, which has slowed the rate of its cash burn, is “extremely well capitalized” and “highly liquid,” McCarthy said in an interview with CNBC. And it’s still on track to meet its cash flow goals for the fiscal year.

“”I’m feeling about as optimistic as I’ve ever felt,” he said, reflecting on the changes the company made over the past several months.

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By dreamer_live

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