Peloton To Cut 800 Jobs, Shut Stores And Raises Prices In Bid For Profitability

As part of its most recent attempt to turn a profit and free up cash, Peloton is laying off staff members and hiking prices on certain of its equipment. The modifications were announced to the company's staff on Friday in a memo from Barry McCarthy, the new CEO of the manufacturer of high-end exercise bikes and treadmills. Peloton will close its North American distribution network and outsource its delivery work in addition to eliminating 784 positions.

The 86-store North American shop base will be "substantially" reduced, according to the New York-based firm. The number of closing locations was not specified, though. The modifications are the most recent ones since McCarthy, who was previously Spotify's CFO, assumed the role of CEO in February. John Foley, who co-founded the company ten years ago, is replaced by him.

Peloton experienced a wild ride due to the coronavirus pandemic. In the midst of lockdowns that made its cycles and treadmills popular with clients who pay a charge to take part in Peloton's interactive exercises, its shares increased by more than 400% in 2020. However, last year's distribution of vaccines forced many individuals out of their houses and back into gyms, wiping away almost all of those gains. The corporation, which experienced its few profitable quarters during the pandemic, is now reducing costs and reining in ambitious goals after grossly underestimating the trend's longevity.

According to Peloton, the price of its premium Bike+ will increase by $500 to $2,495 and that of its Tread treadmill by $800 to $3,495 respectively. A 180-degree turn from April, when it was decreasing prices to try to get rid of inventories, the price rises mark a change in strategy. In the document, McCarthy highlighted that the corporation was experiencing "significant cash flow pressure" at the time and was only beginning its $800 million reorganisation plan.

Peloton made the announcement last month that it would outsource the production of its interactive stationary cycles and treadmills to a Taiwanese manufacturer. Additionally, it announced that it would stop producing at the Tonic Fitness Technology plant in Taiwan for the remainder of the year.

Peloton had roughly 8,600 employees as of June 30 of the previous year, including about 6,700 in the United States. However, it announced in February that it was laying off 2,800 people, including nearly 20% of its corporate staff. It stated at the time that the reduction would not affect teachers who provide interactive lessons for Peloton. Additionally, Peloton said in February that it was finishing up the construction of its Ohio factory's Peloton Output Park. Investors were encouraged by the news on Friday, sending shares of Peloton Interactive Inc. up $1.62, or almost 14%, to $13.53. The stock has dropped 88% in the last 12 months, nevertheless.