Peloton, maker of high-end exercise bike, treadmills and fitness subscriptions for home use, announced another round of layoffs on Thursday. The former “pandemic winner” has let go 500 workers in its fourth round of job cuts this year. According to a statement from the company’s CEO and President Barry McCarthy, the latest cuts were part of the final phase of a broader restructuring, that included outsourcing of all manufacturing, half the member support and a shift to third-party providers for last mile delivery. Peloton will be left with around 3,825 employees, down from more than 6,700 people at the end of June 2021.
Peloton has been struggling to adjust to a post-pandemic, seeing demand for at-home exercising wane amid the reopening of gyms and other sporting facilities. The company’s revenue declined by nearly 30 percent in the quarter ended June 30 amid a strategic shift away from hardware towards software and higher-margin subscriptions. Peloton ended its latest fiscal year just short of three million Connected Fitness subscriptions, but, as the following chart shows, subscriber growth is waning at the worst possible time. While the last quarter marked the first in which subscription revenue exceeded hardware revenue, it also saw net subscriber additions drop to near zero.
Despite the obvious problems, McCarthy disputed reports that his company was for sale or on a tight deadline to reach profitability. “I joined Peloton for the comeback story, not to sell the business. And today the business is fundamentally more sound than ever and on the right path, so to be clear, there is no timeclock nipping at our heels,” he said. The fact that Peloton is in need of a comeback less than two years after Covid lockdowns sent it to unforeseen heights is speaking for itself, though.
Peloton’s share price is down 75 percent this year and down 95 percent from its January 2021 peak. The company’s market capitalization was $3.0 billion on October 6, down from almost $50 billion in January 2021.