Peloton to cut 500 additional jobs as 'necessary step' to save company, return to growth
Peloton Interactive Inc. is cutting approximately 500 jobs, or about 12% of its workforce, the company announced Thursday.
The move arrived as the high-end exercise equipment maker continues its efforts to return to profitability. In a memo sent to employees, CEO and President Barry McCarthy said the layoffs were a "necessary step" in completing Peloton's restructuring plan.
“I know many of you will feel angry, frustrated and emotionally drained by today’s news, but please know this is a necessary step if we are going to save Peloton, and we are," McCarthy wrote in the Thursday morning memo, which Peloton sent to USA TODAY.
"With today’s announcement, the bulk of our restructuring work is complete... I know we can make Peloton a great comeback story if we continue to fight for it."
Pointing to the company's loss of more than $100 million on retail sales last year, McCarthy noted that the next step will be "the right-sizing of our retail footprint," which could include significant store closures in the coming months.
Eliminating the 500 positions, and decreasing other operating expenses, has positioned Peloton to reach break even cash flow by the end of the fiscal year, McCarthy said. In later statements, the CEO pointed to the company's "renewed focus on growth."
Peloton's restructuring plan started in February, which included McCarthy coming on as the new chief executive. Thursday marks the the fourth round of layoffs this year.
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According to Bloomberg, Peloton laid off about 2,800 employees in February during its significant corporate restructure, then roughly 570 jobs were eliminated in July with efforts to outsource hardware manufacturing and 800 people were let go in August to lower expenses further.
The first round of layoffs in February "happened the week that (McCarthy) began, so that was not under his watch," Peloton's SVP of global communications Ben Boyd told USA TODAY Friday. Boyd also confirmed "the second human impact" was due to a shift in manufacturing strategy, and attributed the third to the company's move to third-party delivery providers.
Thursday's announcement is "intended to be the last reshape of our global workforce," Boyd said, noting that the 500 jobs were eliminated across all of the company's divisions and locations.
Peloton is working to return to profitability. According to Associated Press counts, the company lost $1.24 billion in its fourth quarter, stung by restructuring and other charges. Revenue dropped from $936.9 million to $678.7 million. Its annual loss for the fiscal year totaled $2.8 billion.
Peloton shares added 34 cents to $8.83 Thursday. The stock is down about 75% since the start of the year.
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After The Wall Street Journal reported on remarks McCarthy made about the company's viability six months from now, the CEO sent a follow-up letter to employees and issued an additional Thursday afternoon statement.
"The article creates the impression we have six months to live, which is at odds with the story we told and the state of the business. That’s on me and I apologize," McCarthy wrote in his second note to employees, also sent to USA TODAY. "There is no ticking clock on our performance and even if there was, the business is performing well and making steady progress toward our year-end goal of break-even cash flow."
McCarthy also acknowledged the "difficult reality" for the 500 employees impacted Thursday and thanked them for all their contributions.
"Whenever someone loses their job, we take that very seriously," Boyd said. "The company will go forward – it's a tremendous business... (But) all of us who remain are indebted to those those colleagues."
Contributing: The Associated Press.
This article originally appeared on USA TODAY: Peloton cuts 500 additional jobs to save company, return to growth
