CEO Barry McCarthy said the struggling fitness equipment maker has about six months to turn itself around or it likely won’t survive as a viable stand-alone business.
McCarthy indicated in a note to employees and in interviews that the connected-fitness firm will lay off another 500 employees, about 12% of its remaining workforce.
The job reductions will be the fourth this year, reducing Peloton’s headcount to less than half of those employed at the peak last year.
McCarthy, who replaced founder John Foley in February, added this would be the last of a series of significant moves to slash expenses, and Peloton would now be focused on growth. Along with eliminating jobs, McCarthy has closed company-operated stores, outsourced manufacturing, and reduced inventory.
In an effort to boost sales, Peloton announced late last month it was teaming with DICK’S Sporting Goods (DKS) to sell Peloton exercise equipment and accessories in DICK’S retail outlets. It is the first time the company has offered its products in brick and mortar stores other than its own.
Peloton noted the move is part of the company’s effort to reach new customers, expand its total addressable market, and increase subscribers. DICK’S explained that adding Peloton products gives the retailer another high value brand that’s expected to bring in new shoppers.
Pandemic Demand Boom
Peloton was one of the big success stories during the COVID-19 outbreak, as lockdowns led people stuck at home to exercise more. However, demand waned with the easing of pandemic restrictions, and the company has reported six consecutive quarters of losses.
Shares of Peloton Interactive fell about 1% in early trading on the news. They’ve lost 75% of their value so far this year.