- Peloton value has fallen from US$50bn to US$8bn in 12 months
- Co-founder John Foley replaced by former Spotify CFO Barry McCarthy
- Restructure could save US$800m
Connected fitness specialist Peloton has confirmed co-founder John Foley is to leave the company as part of a wide-ranging restructure that will see 2,800 job cuts as it adapts to lower demand in a post-lockdown world.
Peloton manufactures high-end exercise bikes and treadmills supported by a highly-integrated subscription service that includes social features and live instruction classes. Interest in its products increased significantly during the pandemic, with gyms closed and fitness classes suspended.
However, the easing of lockdown restrictions has seen orders decline and Peloton’s market value fall from US$50 billion to around US$8 billion over the past 12 months. This has made the company an attractive target to suitors, with Amazon, Apple and Nike all linked with a takeover, and intensified investor discontent.
In a bid to cut costs by up to US$800 million and lay a foundation for long-term, sustainable growth, Peloton says it will reduce its manufacturing footprint, outsource more of its delivery and distribution, and reduce its workforce. Of the 2,800 jobs at risk, around a fifth will be at a corporate level.
“Peloton is at an important juncture, and we are taking decisive steps. Our focus is on building on the already amazing Peloton member experience, while optimising our organisation to deliver profitable growth,” said Foley.
“With today’s announcements, we are taking action to ensure Peloton capitalises on the large, long-term connected fitness opportunity. This restructuring programme is the result of diligent planning to address key areas of the business and realign our operations so that we can execute against our growth opportunity with efficiency and discipline.
“These decisions, particularly those related to our impacted Peloton team members, were not taken lightly. We greatly value the contributions of our talented colleagues and are committed to supporting impacted team members in their transitions.”
Foley will remain as executive chair and will be replaced by former Spotify chief financial officer Barry McCarthy.
“As a passionate Peloton member, I have experienced first-hand this fantastic company’s mission and believe there is enormous potential for the platform,” said McCarthy.
One area of encouragement is that although Peloton is struggling to acquire new users willing to pay for its hardware, subscription churn is relatively low at less than one per cent. This suggests that any suitor would gain access to a highly-engaged, affluent user base.
However, it could be argued that many users maintain subscriptions in order to justify the significant expense of the hardware which without the associated software, becomes just another exercise bike or treadmill.