Dive Brief:
- As part of a turnaround strategy, Peloton will reduce its workforce by about 12%, or approximately 500 jobs, according to a company spokesperson.
- CEO Barry McCarthy said the company lost “more than $100M on retail last year,” which is why the company is restructuring in order to reach break-even cash flow by the end of the fiscal year, according to an internal memo to Peloton employees shared with Retail Dive.
- The news follows a deal with U.S. Hilton hotels to put a Peloton Bike in every fitness center that was announced on Monday. The brand said 90% of its members indicated they are more likely to stay at a hotel that utilized its bike equipment.
Dive Insight:
Peloton is continuing its journey to restructure the company following a rough series of earnings this year.
The Wall Street Journal reported that McCarthy is giving the company about six months to turn itself around and likely isn’t viable as a stand-alone company if that fails. A Peloton spokesperson told Retail Dive that McCarthy did not make the comment, and that he is optimistic about the future of the company.
“Twice in my career I’ve found myself in a similar situation. The first time was brutally hard. The second time I’d learned from the first. Resilience is a conscious choice. Sooner or later, we all get knocked down in life,” McCarthy said in his memo to employees about the job cuts. “But we all deal with setbacks in our own way. However you deal with it, don’t ever lose faith in yourself, and don’t ever stop getting up off the ground when you get knocked down.”
This is also not the first — or second — time Peloton has cut jobs this year. The at-home fitness brand laid off employees in February and reportedly in August.
The news comes after a month of various announcements and leadership changes from Peloton. In September, the brand entered a wholesale deal with Dick’s Sporting Goods. Additionally, Peloton’s head of marketing, chief commercial officer and the brand's co-founders all exited the company recently.
The layoffs alone are unlikely to transform the struggling business, according to GlobalData Managing Director Neil Saunders.
“The issue for Peloton is one of time,” Saunders said in emailed comments. “While many of the actions being taken are sensible, the company’s issues run extremely deep, and it remains debatable whether there is enough runway for them to turn things around.”
