Peloton is laying off nearly 800 workers and raising prices on some of its equipment as part of its latest effort to turn the company profitable and free up cash.
NEW YORK (Reuters) – Peloton is laying off workers and raising prices on some of its equipment in its latest attempt to turn the company profitable and free up cash.
The changes were announced Friday in a memo to employees from the company’s new CEO, Barry McCarthy, who makes high-end exercise bikes and treadmills. The peloton will close its North American distribution network and outsource delivery to third-party providers, in addition to cutting 784 jobs.
Peloton is laying off nearly 800 workers and raising prices on some of its equipment as part of its latest effort to turn the company profitable and free up cash.
NEW YORK (Reuters) – Peloton is laying off workers and raising prices on some of its equipment in its latest attempt to turn the company profitable and free up cash.
The changes were announced Friday in a memo to employees from the company’s new CEO, Barry McCarthy, who makes high-end exercise bikes and treadmills. The peloton will close its North American distribution network and outsource delivery to third-party providers, in addition to cutting 784 jobs.
The New York-based company also stated that it intends to “significantly” reduce its North American store base, which currently stands at 86. However, it did not specify how many locations would be closed.
The changes are the most recent since McCarthy, who previously served as Spotify’s chief financial officer, was appointed CEO in February. He takes over for John Foley, who co-founded the company ten years ago.
The coronavirus pandemic threw Peloton for a loop. Its stock rose more than 400% in 2020 as a result of lockdowns that increased the popularity of its bikes and treadmills among customers who pay a fee to participate in Peloton’s interactive workouts.
However, nearly all of those gains were erased last year as vaccine distribution drove many people out of their homes and back into gyms. Now, the company, which had its only profitable quarters during the pandemic, is scaling back ambitious plans and cutting costs after grossly underestimating the longevity of the exercise-at-home trend.
Peloton announced a $500 increase in the price of its flagship Bike+ to $2,495 and an $800 increase in the price of its Tread treadmill to $3,495. The price increases are a 180-degree turn from April when it was lowering prices to clear inventory. McCarthy stated in the memo that the company was still in the early stages of its $800 million restructuring plan and was experiencing “considerable cash flow pressure” at the time.
Peloton announced last month that it will no longer manufacture its interactive stationary bikes and treadmills, instead relying on a Taiwanese manufacturer. It also announced that manufacturing operations at the Tonic Fitness Technology plant in Taiwan would be suspended for the remainder of the year.
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