OAN’s James Meyers
8:10 AM – Thursday, May 2, 2024
Peloton’s Chief Executive Officer has officially stepped down from the role as the popular fitness company is planning to cut 15% of its global workforce.
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Barry McCarthy told Peloton’s staff of his resignation in a note sent out on Thursday morning that his “one lasting legacy at Peloton” is the “GREAT lead team” he recruited since he started his position in 2022.
“Although the stock market hasn’t recognized this yet, they will. It’s simply a matter of time,” McCarthy added in reference to the nearly 45% drop in share price Peloton has experienced so far this year.
“Hard as the decision has been to make additional headcount cuts, Peloton simply had no other way to bring its spending in line with its revenue,” McCarthy added of the forthcoming layoffs, which will affect roughly 400 roles.
With the company getting rid of 400 jobs it will help Peloton cut $200 million in costs.
The company said that will help it invest in “software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business.”
With the announcement from McCarthy shares grew over 7% in premarket trading Thursday. However, the stock is down almost 90% from its 2020 highs when sales of its treadmills and bikes skyrocketed due to gyms and fitness centers being closed.
McCarthy was able to strike deals with Amazon, Lululemon and Dick’s Sporting Goods during his tenure.
“Achieving positive FCF makes Peloton a more attractive borrower, which is important as the company turns its attention to the necessary task of successfully refinancing its debt.”
Additionally, McCarthy’s exit comes hours before Peloton is set to release its fiscal third quarter earnings report, with expectations of posting a 3.5% sales loss.
However, in the previous quarter, the fitness company announced sales fell to $744 million, which is a 6% decline from the year prior and 34% less than two years ago.
Furthermore, Peloton cut its full-year guidance to a range between $2.68 billion and $2.75 billion, down from its previous projections of $2.8 billion.
In his last day as CEO, McCarthy on Wednesday announced a partnership with Hyatt hotels, offering World of Hyatt loyalty members points when they use Peloton equipment at Hyatt properties.
Currently, a brand-new Peloton bike sells for between $1,445 and $2,495 depending on the model, while the treadmill, called the Peloton Tread, ranges from $2,995 to $5,995.
Despite purchasing the equipment, customers still have to pay $24 per month to get access to classes at home using the Peloton App+.
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