Peloton CEO Barry McCarthy wrote in a letter to employees Friday that the interactive fitness company is “making the hard choices” that will lead to the elimination of 784 jobs, a major reduction of its retail locations, and price increases for its most-expensive products.
The changes detailed in the letter obtained by Front Office Sports were the most dramatic since McCarthy, a former Spotify CFO, replaced embattled CEO John Foley in February.
Peloton will raise the price of the Bike+ by $500 (now $2,495) and the Tread by $800 ($3,495).
After a meteoric rise early in the pandemic, Peloton lost nearly $757 million in the first three months of this year, and its valuation — once at about $45 billion — has dipped 90% in less than two years.
Bloomberg was the first outlet to report the letter.
Restructuring Gains Steam
The restructuring plan already included closing warehouse and retail locations as demand slowed from earlier in the pandemic.
- Peloton currently has 88 stores in the U.S. and Canada. The letter stated that the company “will reduce [its] retail presence across North America, although the closures may not occur this year.”
- The delivery of its interactive products, which had been handled by employees, will be outsourced, which will cut delivery costs in half. Peloton will also outsource its customer service teams.
- The company will eliminate its North American field operations warehouse, which will result in a “significant reduction in our delivery workforce teams.”
“Any decision we make that impacts team members is not taken lightly, but these moves enable Peloton to become more efficient, cost effective, and agile,” McCarthy wrote.
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