Peloton is replacing its CEO and cutting around 2,800 jobs globally in an attempt to shake up its business as pandemic-fueled demand for its exercise equipment slows.
The company employed 8,976 people as of Sept. 30. The cuts represent over 30% of Peloton's workforce.
In a note sent to employees and posted to Peloton's website on Tuesday, co-founder and CEO John Foley said that he will become the company's executive chair and that Barry McCarthy, a former executive at Spotify and Netflix, will take over as CEO effective Tuesday. Company president William Lynch will leave his role and become a "non-executive director" on Peloton's board.
Foley said in the note that Peloton will provide "a meaningful cash severance allotment" to the laid-off employees "based on job level and tenure with Peloton." For those enrolled in company benefits, Peloton will extend health care coverage "for a period of time," Foley said.
Peloton will also scale back manufacturing operations and reverse course on its plan for a factory in the US, Foley said.
The pandemic home-workout boom provided Peloton with a major boost, but the momentum has faded drastically. The company's stock is down around 31% this fiscal year as of Monday, though stock is slightly up Tuesday following the news.
Several companies have reportedly expressed interest in buying Peloton, including Amazon. A report from The Wall Street Journal said a buyer would benefit from the transaction by getting access to data from Peloton's millions of users.
Peloton declined to comment beyond the note to employees.