Key Takeaways
- Peloton announced new cost-cutting measures, including layoffs, and that CEO Barry McCarthy was stepping down.
- The exercise company that has struggled with a slump in demand following a boom during pandemic lockdowns said it will slash its workforce by about 15% and reduce its showroom presence.
- Peloton’s third-quarter loss and revenue missed analysts’ expectations.
Shares of Peloton Interactive (PTON) sank to an all-time low Thursday after the provider of exercise machines and online workouts announced new cost-cutting measures, including layoffs, and that CEO Barry McCarthy was stepping down.
Peloton said it was undertaking “comprehensive restructuring efforts to align the company’s cost structure with the current size of its business” that would position it for “sustained, positive free cash flow.”
The moves included reducing its workforce by about 15% or 400 positions, continuing the reduction in its retail showroom footprint, and reimagining “the company’s international go-to-market approach to be more targeted and efficient.”
Q3 Results Miss Estimates
The news came as Peloton posted worse-than-expected results for its fiscal third quarter of 2024. The company reported a loss of 45 cents per share, with revenue down 4.2% year-over-year to $717.7 million. Both were short of estimates compiled by Visible Alpha.
Connected fitness revenue slumped 13.6% to $279.9 million, while subscription revenue rose 3.1% to $437.8 million. Membership slipped 1.5% to 6.6 million.
CEO Barry McCarthy Steps Down
McCarthy took over Peloton in February 2022 from co-founder John Foley as the company struggled from a slump in demand following a boom during the COVID-19 pandemic lockdowns. He began a major restructuring of the firm, slashing jobs and reducing costs.
McCarthy will be replaced on an interim basis by current Chair Karen Boone and Cirector Chris Bruzzo. McCarthy will stay on as a “strategic advisor” to the company through the end of 2024.
Peloton shares were 14.4% lower at $2.76 as of 11 a.m. ET Thursday and have lost about 54% of their value this year.