Platoon cuts 500 more jobs in a move that CEO Barry McCarthy says should allow the struggling fitness equipment maker to return to growth.
The cuts, which represent about 12% of Peloton’s workforce, mark a turning point for the company, McCarthy told CNBC on Thursday. Peloton has already seen several rounds of layoffs this year.
“The restructuring is complete with today’s announcement,” he said. “Now we are focusing on growth.”
Shares of Peloton closed up 4% on Thursday. The stock is down about 75% so far this year.
The CEO thanked the laid-off employees in a statement released late Thursday afternoon: “Restructuring a business requires tough decisions that affect people’s lives. I am grateful for the many contributions from those who have been impacted”.
Peloton’s recent strategic changes have sparked speculation that it may be looking to sell itself. But in the late afternoon statement, McCarthy said, “I joined Peloton for the comeback story, not to sell the business.”
McCarthy told CNBC the company must now prove its decisions, including equipment rentals and partnerships with Amazon and hiltoncan help him grow.
McCarthy took over as CEO of Peloton earlier this year from co-founder John Foley, and has overseen drastic changes to its business model as the company struggles after a sales boom earlier in the Covid pandemic. A former Spotify and Netflix executive, he pushed the company’s business further into subscriptions while expanding the availability of its products beyond Peloton’s direct consumer roots.
A man walks past a Peloton store in Manhattan on May 05, 2021 in New York City.
John Smith | Corbis News | Getty Images
Earlier this week, the company announced that it would put its bikes in all Hilton-branded hotels in the United States. It recently announced partnerships to sell equipment in Dick Sporting Goods stores and on Amazon.
McCarthy spoke to CNBC after The Wall Street Journal reported on his remarks about where the company stands six months from now.
“We need to grow to get the business to a sustainable level,” McCarthy told the Journal, which first reported on the layoffs.
Later Thursday, McCarthy issued a memo to employees regarding his remarks to the media about the company’s turnaround plan. (Read the memo at the bottom of this article.)
“It’s on me and I apologize,” he said, referring to the impression created by the six-month delay mentioned in the Journal article.
McCarthy told CNBC that Peloton, which has slowed the pace of its cash burn, will still be “extremely well capitalized” and “very liquid.” And he’s still on track to meet his cash flow targets for the year.
“I feel about as optimistic as ever,” he said, reflecting on the changes the company has made over the past few months.
Read McCarthy’s memo from Thursday afternoon:
I’m sure you’ve all seen or heard of today’s Wall Street Journal story. We expected a story about the redemption and successful turnaround of Peloton, so we invested time in updating them on the status of our turnaround. The headline should have been that recent strong execution and today’s restructuring have positioned us to achieve our year-end objective of balancing cash flow, with a renewed focus on accelerating our growth, that’s why I’ve never felt more optimistic about our future. Would I say that if it wasn’t true? No chance……
Instead, the article creates the impression that we have six months to live, which contradicts the story we told and the state of the company. It’s my fault and I apologize.
I was asked the question: “How long do you think you have to show success?” My answer was 12 months from the time I joined Peloton, knowing that we are already showing significant progress and in record time. It seemed like a no-brainer at the time.
In the past, you have heard me say that we are all held accountable for our performance. Me understood. But to be clear, there is no stopwatch on our performance and even if there was, the business is doing well and making steady progress towards our year-end goal of balancing cash flow. Our immediate goal is to ensure that our most important stakeholders – starting with you – understand that this is the case.
Most importantly, I don’t want this news cycle to overshadow the harsh reality that 500 of our colleagues were affected today, or the gratitude I have for all they and you have done for the company. .