red Emergency Pull lever

Peloton swaps boss and cuts 2,800 jobs

Factory construction also stopped: $440 million loss: Peloton replaces boss and cuts 2,800 jobs
Peloton faces austerity and leadership changes as a result of $440 million in losses. The fitness equipment specialist plans to cut several thousand jobs. In addition, the construction of a factory in the USA is being put on hold.
For links on this page, FOCUS Online may receive a commission from the retailer, eg for with

The fitness equipment specialist Peloton wants to get out of its crisis with a change of boss and austerity measures. Among other things, Peloton cuts around a fifth of the jobs with 2800 jobs and stops the construction of a factory in the USA. Co-founder John Foley is also stepping down as CEO. Barry McCarthy, who used to be chief financial officer at streaming specialists Netflix and Spotify, will take on the top job. Hardly anyone in the world understands subscription business models as well as McCarthy, Foley said.

Peloton cuts a fifth of all jobs and replaces boss

Peloton was one of the big winners early in the pandemic. Many customers of closed fitness studios brought the company’s comparatively expensive exercise bikes and treadmills home. But the boom died down with the easing of corona restrictions, while Peloton apparently overestimated demand. In November, the company had to slash its sales forecast for the fiscal year running through mid-2022 – by up to $1 billion.
Since the market value of Peloton collapsed from around 50 billion to 8 billion dollars in the face of the problems, according to media reports, Amazon and Nike, among others, were considering takeover bids. The change of boss and the austerity measures are a sign that Peloton wants to secure its independence.
Peloton let costs get out of hand “as if Corona were the new normal”
At the same time, CFO Jill Woodworth emphasized that Peloton continues to see a great future for connected fitness technology in the home and wants to remain at the forefront of the market.
The austerity course and measures for more efficiency should reduce the costs by 800 million dollars annually. In addition, Peloton is capping capital expenditures by $150 million this year. The future boss McCarthy criticized in the “Wall Street Journal” that Peloton had let the costs get out of hand “as if Covid were the new normal”.
Fitness equipment specialist loses nearly $440 million
When Peloton couldn’t ship its equipment fast enough early in the pandemic, the company decided to build a $400 million factory in Ohio. The construction freeze now entails costs of 60 million dollars. In order to be leaner, Peloton no longer wants to operate larger parts of the logistics itself.
In the past quarter, sales rose by a good 6 percent year-on-year to $1.13 billion – but only thanks to an acquisition, as Woodworth admitted in a conference call with analysts. At the same time, revenue from training subscriptions rose 70 percent to $337.5 million, underscoring the decline in the hardware business. The bottom line was a loss of almost $440 million from being in the black from $63.6 million a year earlier.
Peloton acquired more than 2 million customers due to pandemic
At the same time, subscription customers continue to use their Peloton equipment actively, with an average of 15.5 training sessions per month. In Corona everyday life a year earlier, there were still a good 21. At the end of the quarter, Peloton had 2.77 million subscribers – over two million more than before the pandemic.
Peloton shares, which recently jumped by around a fifth in the face of takeover speculation, gained around 10 percent at the start of US trading. Foley was already under pressure: The activist investor Blackwells Capital called for his resignation and accused the management team of mismanagement. At the same time, he and the early team remain in control thanks to shares with 20 times more voting rights than ordinary investors.
Peloton also cut its own flesh last year with a price cut. In August, the price of the original training bike was cut by a fifth. Customers then increasingly preferred it to the more expensive and for Peloton more lucrative new version. Before the price drop, the two models had sold about equally well. After that, the older device dominated with around 75 percent. That depressed sales. At the same time, Peloton is under price pressure because other providers are fighting for the market with cheaper devices.

Related Posts

Leave a Reply

%d bloggers like this: