Peloton CEO Barry McCarthy is leaving his role, and the company is cutting about 15% of its workforce as numerous attempts to regain its pandemic-era glory have failed.
McCarthy, who was named CEO just two years ago, will become a strategic advisor through the end of the year, Peloton said in a press release. In his place, Peloton has started a “comprehensive search process” for his replacement and two executives will become interim co-CEOs in the meantime.
Peloton also announced that it’s eliminating 400 jobs, which will help the company cut $200 million in costs. The company said that will help it invest in “software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business.”
Shares spiked more than 7% in premarket trading Thursday. The stock is down about 90% from its 2020 highs when sales of its treadmills and bikes soared because of gyms being closed.
McCarthy, a former chief financial officer of Spotify and Netflix, tried to engineer a number of ideas to turn around Peloton. He recently admitted that some of his ideas were failures, such as selling Peloton bikes with college colors, and said that members’ experience with its customer service department “tarnished our brand.”
An attempt to redesign its fitness app with a free tier failed, and Peloton recently eliminated that feature for new subscribers.
Under McCarthy’s tenure, he laid off thousands of employees, hiked prices and announced the closure of retail stores. Recalls have also been an issue, and the company agreed to pay $19 million last year after the Consumer Product Safety Commission levied “one of the largest civil penalties in its history,” the agency said, following a recall of 125,000 unsafe Peloton treadmills.
There were some bright spots for McCarthy: A partnership with third-party retailers, like Dick’s Sporting Goods and Amazon, is performing well for Peloton as well as its agreement with Lululemon to sell apparel.
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