Peloton, an American fitness equipment manufacturer, is facing a significant decline in sales and revenue after experiencing a surge in demand at the beginning of the pandemic. Due to slow sales, the company has announced it will close branches and cut 15 percent of its workforce, or approximately 400 employees. The CEO, Barry McCarthy, is departing and the company is actively seeking a new leader. In the meantime, Peloton Board Members Karen Boone and Chris Bruzzo will serve as interim bosses.
Initially, Peloton benefited from the closure of gyms during the pandemic, resulting in a notable increase in sales for its training bikes and treadmills. However, the company viewed this as the start of a period of growth and made significant investments in expanding its production capacities, including constructing a factory in the USA. This turned out to be a costly mistake as demand for their devices plummeted once pandemic restrictions were lifted. With excess inventory and canceled factory construction plans, Peloton chose to outsource production to a contract manufacturer.
Since 2021 there have been multiple rounds of job cuts reducing Peloton’s workforce to approximately 3,000 employees. Sales in the previous year dropped by four percent to nearly $718 million resulting in a loss of $167.3 million. To align costs with current business climate further job cuts were deemed necessary by McCarthy. The company is also reevaluating its showroom strategy and exploring options for refinancing with banks.
Peloton was previously valued at over $50 billion on the stock market with shares trading at $177 however due to current challenges such as rapid market changes and declining sales value has decreased significantly with shares recently trading for less than $3 each.