Peloton, a US fitness equipment manufacturer known for its cutting-edge exercise bikes and classes, has experienced a steep decline in sales after experiencing a surge in demand at the start of the pandemic. As a result, the company is closing branches and cutting 15 percent of its workforce, or around 400 employees. CEO Barry McCarthy is departing, and the company is actively seeking a new leader. In the meantime, Peloton Board Members Karen Boone and Chris Bruzzo will serve as interim bosses.
Initially, Peloton saw growth due to the closure of gyms during the pandemic, resulting in an increase in sales for their training bikes and treadmills. However, Peloton viewed this as just the beginning of a period of growth and made significant investments in expanding its production capacities, including building a factory in the USA. This turned out to be a costly mistake as demand for their devices plummeted once pandemic restrictions were lifted. With excess inventory and the cancellation of the USA factory construction, Peloton chose to outsource production to a contract manufacturer.
Since then, there have been multiple rounds of job cuts that reduced the workforce to approximately 3,000 employees. Sales in the previous year dropped by four percent to nearly $718 million, resulting in a loss of $167.3 million. To align costs with the current business climate, additional job cuts were deemed necessary by McCarthy. The company is also reevaluating its showroom strategy and exploring options for refinancing with banks.
At its peak, Peloton was valued at over $50 billion on the stock market with shares trading at $177. However, today shares are trading for less than $3 each and Peloton faces serious challenges as it navigates a rapidly changing market while trying to regain its footing in