Peloton Interactive will embark on a sweeping overhaul that includes cutting nearly 800 jobs, raising prices for its Bike+ and Tread machines substantially, and outsourcing functions such as equipment deliveries and customer service to outside companies.
The changes, which the company disclosed on Friday in a memo to employees, also includes gradually closing many of its retail showrooms – a process that will get under way next year. It’s the most wide-ranging shake-up yet under chief executive Barry McCarthy, a tech veteran who took the helm in February.
Peloton is hoping to turn around a business that had thrived during the early days of the pandemic but suffered a punishing slowdown in the past year. Sales are declining, losses are mounting, and the company’s stock price was down nearly 90 per cent over the past 12 months. The latest moves are an attempt to reinvigorate sales, boost efficiency and restore some of Peloton’s former cachet.
“We have to make our revenues stop shrinking and start growing again,” Mr McCarthy said in the memo.
Investors applauded the moves, sending the shares up as much as 9.7 per cent to $13.10 in New York trading.
Peloton is betting that the price increases will help juice revenue. During its fiscal third quarter, the New York-based company missed analyst estimates – with revenue declining 24 per cent and losses coming in far wider than expected.
Peloton is making other changes, including a return to in-person work. Office employees will have to come in at least three days a week starting September 6th, Mr McCarthy said on Friday. That’s in line with the approach used by other tech companies, such as Apple, but marks a twist for a company that benefited from the work-from-home lifestyle. – Bloomberg