Peloton’s chief executive officer is stepping down from the role as the fitness company plans to cut roughly 15% of its global workforce.
Chief Barry McCarthy told Peloton’s roughly 3,500 employees of his resignation in a note sent Thursday morning that his “one lasting legacy at Peloton” is the “GREAT lead team” he’s recruited since stepping into the top job in 2022.
“Although the stock market hasnt recognized this yet, they will. Its 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.
McCarthy — who struck deals with the likes of Lululemon, Amazon and Dick’s Sporting Goods during his tenure — said the cuts are the only way to generate 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.”
News of McCarthy’s exit comes just an hour before Peloton is set to release its fiscal third quarter earnings report, when it’s expected to post a 3.5% sales loss.
Peloton shares jumped 11% in early trading.
In the previous quarter, Peloton said sales fell to $744 million — a whopping 6% decline from the year prior and 34% less than two years ago as the exercise-class company struggled to continue its pandemic hot streak, where tons of cooped-up customers bought its at-home stationary bike during COVID lockdowns.
At the time, Peloton also dialed back its fourth-quarter revenue projections to a range between $700 million and $725 million — below analyst estimates of $750 million.
The company also slashed its full-year guidance to a range between $2.68 billion and $2.75 billion, down from its previous forecast of $2.8 billion.
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In McCarthy’s last-ditch effort to bolster revenues, on his last day as CEO on Wednesday, New York City-based Peloton announced a partnership with Hyatt hotels, offering World of Hyatt loyalty members points when they use Peloton equipment at Hyatt properties.
A press release on the partnership said that the deal will see more than 800 Hyatt properties decked out with Peloton equipment, including access to Peloton classes via in-room TVs.
To get access to those classes at home while using Peloton’s exercise bike or treadmills, customers have to dish out $24 per month to use the Peloton App+ — after purchasing the actual equipment.
A brand-new Peloton bike, for reference, retails 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.
Peloton also offers a rowing machine for a steep $2.995.
Strength, yoga, outdoor running and gym workout classes are also offered via the app for a more modest $12.99 monthly.