Corona was an exception, not a beginning
Peloton cuts hundreds of jobs – boss McCarthy quits
May 2, 2024, 7:19 p.m
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During the Corona period, business with treadmills and training bikes is booming. The US provider Peloton sees itself at the beginning of a growth story. But the pandemic is passing and the gyms are opening again. What remains are the company’s full warehouses. Now the austerity course follows.
The sporting goods company Peloton continues to struggle with the return to harsh reality. After the end of the Corona boom, when the company benefited from the trend towards exercise in one’s own four walls, the new boss focused on subscription revenue and wanted to make Peloton more independent of equipment sales. But the plan didn’t work – now the company is once again pulling out the red pencil. Around 400 employees are to leave, around 15 percent of the workforce, as Peloton announced. On top of that, boss Barry McCarthy, who was hired two years ago for a fresh start, is throwing in the towel.
Peloton benefited greatly from gym closures at the start of the pandemic. Sales of training bikes and treadmills skyrocketed. Interested parties sometimes had to wait a long time for their devices. However, Peloton did not interpret the boost as a special boom, but rather as the beginning of an era of growth and invested in expanding its capacities, including building a factory in the USA.
This turned out to be a serious miscalculation: when Corona restrictions were lifted, interest in the company’s devices fell again. Peloton was sitting on high inventory levels, construction of the factory in the US was canceled and Peloton decided to outsource equipment production entirely to a contract manufacturer.
There have been several rounds of job cuts since 2021. Last year, sales fell by four percent year-on-year to just under $718 million. The bottom line was that there was a loss of $167 million after being in the red of almost $276 million a year earlier.
The renewed layoffs were the only way to adjust costs to the business situation, said the former CFO of the streaming giants Netflix and Spotify, McCarthy. The red pencil will also be applied to the showrooms. Peloton is also in discussions with banks about its refinancing strategy. The already badly hit share temporarily fell by more than 13 percent. The paper now costs less than 3 euros. At the height of the pandemic, some shares were traded for more than 130 euros.