Peloton plans to slash another 500 jobs, or roughly 12% of its workforce, it said Thursday, in an attempt to turn the fitness-equipment company around. The move was earlier reported by The Wall Street Journal and CNBC.
Peloton's financial outlook has steadily declined over the last year, with the company in August reporting six quarters of consecutive losses, including $1.2 billion in losses during the June quarter and $2.8 billion over the year that ended in June. And it's not only sales of new equipment that are down: Peloton's subscriber base has also stagnated in recent months.
These challenges follow Peloton's boom period during the early months of the COVID-19 pandemic. As consumers found themselves stuck indoors, they looked for alternative ways to exercise, and Peloton bikes offered an appealing solution. With a screen mounted to the stationary bike and a subscription service that let users play live and on-demand classes, consumers gravitated toward the product. But now consumers are resuming pre-COVID routines, returning to gyms and in-person classes, and that's proved to be a detrimental shift for the fitness company.
In an effort to turn things around, Peloton has had multiple rounds of layoffs, with Thursday's announcement marking the company's fourth round of job cuts this year.
"A key aspect of Peloton's transformation journey is optimizing efficiencies and implementing cost savings to simplify our business and achieve break-even cash flow by the end of our fiscal year," a company spokesperson told CNET. "Decisions like this are incredibly difficult and Peloton is doing all we can to help our impacted colleagues. As we pivot to growth, today marks the completion of the vast majority of our restructuring plan we began in February 2022."
The completion of that restructuring strategy marks a pivotal point for the company, which has recently entered into partnerships with Amazon, Dick's Sporting Goods and Hilton.
Peloton's next steps are to focus on growth, CEO Barry McCarthy McCarthy, who's been in the role since February, told CNBC.
"I'm feeling about as optimistic as I've ever felt," McCarthy said.
Peloton must now prove its strategy changes will help it grow, and it'll need to assess where the company stands in six months, McCarthy said. If it fails to return to growth following these changes, he suggested, Peloton may not be viable as a stand-alone company, according to The Wall Street Journal.
"With today's announcement, the bulk of our restructuring work is complete," McCarthy said in an internal memo to employees. "I am acutely aware many of those impacted by these changes aren't just colleagues but are also close friends. 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."