Peloton is cutting another 500 jobs, or 12 percent of its workforce, as it attempts to turn around its struggling connected fitness business, CEO Barry McCarthy announced in a memo to staff on Thursday. McCarthy says the company, which has lost money for six quarters straight, has six months to get back on its feet or else it may not be viable as a standalone company, The Wall Street Journal reports.
This is Peloton’s fourth round of layoffs this year after it let go of around 2,800 employees in February, 500 in July, and almost 800 in August. Combined, the cuts mean that the company’s workforce will now sit at around 3,800 employees globally. That’s a big drop from Peloton’s peak of 8,600 employees last year but not far off from the 3,700 people the WSJ notes it employed around the start of the pandemic. Today’s cuts are expected to mainly affect employees working in marketing.
“There comes a point in time when we’ve either been successful or we have not”
“There comes a point in time when we’ve either been successful or we have not,” McCarthy, who took over as CEO in February, told the WSJ in an interview. As well as cutting staff, the company has also been making other moves to reduce its operating costs. It now sells equipment and apparel through Amazon and Dick’s Sporting Goods as it shifts toward third-party distributors. It’s also announced plans to outsource the production of its bikes and treadmills and to shutter its retail showrooms starting next year.
But these cuts haven’t yet been enough to put the company back in the black. In its August earnings release, Peloton reported a $1.2 billion operating loss, a decline in membership, and a 28 percent drop in revenue. McCarthy characterized today’s cuts as being its last major move to reduce operating costs, with increasing revenue being the focus going forward.
While numerous tech companies have either announced job cuts (Snap) or hiring freezes (Meta, Google, Amazon) this year, Peloton has been particularly badly hit as pandemic-related lockdowns come to an end. In recent months, many have been able to return the public gyms and other communal forms of exercise that were inaccessible during the pandemic. But its costly exercise equipment is also proving a harder sell in a time of high inflation and general economic uncertainty.