Yahoo Finance Peloton to cut 15% of workforce, CEO Barry McCarthy stepping down
May 2 (UPI) -- Fitness giant Peloton announced on Thursday that it is cutting 15% of its staff worldwide or about 400 employees, and CEO Barry McCarthy will be stepping down as the company struggles to find its financial footing.
Peloton said it will also close some retail showrooms while it consolidates resources. The announcement was made ahead of revealing its 2024 third-quarter financial report Thursday morning.
"Today we are announcing a new restructuring program to reduce annual expenses by more than $200 million," Peloton said in a letter to shareholders. "The objective of the cost reductions is to align our cost structure with the current size of our business and position Peloton to generate sustained and meaningful positive free cash flow, which is a top priority for us."
In a message to employees, McCarthy said the layoffs were unavoidable in streamlining costs and making Peloton profitable again.
"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 said in the statement. "The company had to do that in order to generate sustainable positive [free cash flow].
"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."
Peloton said the reduction will allow the company to make software, hardware and content innovations and improvements to improve its business.
Karen Boone and Chis Bruzzo, Peloton's current board chair and director, respectively, will temporarily handle the CEO duties until a new leader is chosen. Another board director, Jay Hoag, has been named the new chair.
McCarthy will stay with Peloton as a strategic advisor for the rest of 2024, Peloton said.
