Peloton to cut 800 jobs, close stores and raise bike and treadmill prices
Peloton said it is cutting almost 800 jobs and will be closing stores as it seeks to reduce costs and improve its financial situation.
In a memo from CEO Barry McCarthy to employees, McCarthy wrote that the decisions are necessary "if Peloton is ever going to become cash flow positive." In a statement to CBS News, Peloton said the company is cutting 784 jobs.
That represents the second round of layoffs this year, with Peloton cutting about 2,800 workers in February and replacing former CEO John Foley with McCarthy.
Peloton was a high-flyer early in the pandemic as Americans flocked to buy its products amid nationwide shutdowns. But as pandemic restrictions eased and people became more comfortable returning to the gym, Peloton's fortunes — and stock price — have waned.
"These are hard choices because we are impacting people's lives," McCarthy wrote in the memo. But, he added, "We simply must become self-sustaining on a cash flow basis."
In a statement sent to CBS News, the company said "these moves enable Peloton to become more efficient, cost effective, and agile."
McCarthy said the company is raising prices on one of its bikes and treadmills, boosting the cost of the Bike+ by $500 to $2,495 and the Peloton Tread by $800 to $3,495. He added that the price of Bike v1 and its streaming device Guide will remain the same.
Peloton will also be closing stores across North America, although McCarthy didn't specify how many. But he described the decision as "a significant and aggressive reduction of Peloton's retail footprint."
Peloton's stock price has plunged 88% in the past year, although it jumped 9.8% on Friday after news of the layoffs and store closures.
McCarthy hinted that these changes may not be the last, adding, "As we face economic uncertainty in the global macroeconomic outlook, we will continue to analyze our workforce and expenditures."
