TECH: Peloton Cuts Another 500 Jobs in 4th Layoffs of the Year

Pelo­ton has announced lay­offs for the fourth time this year. The strug­gling fit­ness com­pa­ny will cut anoth­er 500 jobs, CEO Bar­ry McCarthy told CNBC.

In a memo to employ­ees, McCarthy wrote that the move is part of Pelo­ton’s effort to reach break-even cash flow by the end of its fis­cal year 2023 (i.e. the end of June next year).

“I am acute­ly aware that many of those affect­ed by this change are not just col­leagues, but close friends,” McCarthy said in a memo obtained by Bloomberg.

Angry, frus­trat­ed and emo­tion­al­ly drained by the news, know that this is a nec­es­sary step if we are to save Peloton. ”

The job cuts rep­re­sent about 12 per­cent of Pelo­ton’s work­force. In Feb­ru­ary, just after McCarthy took office, the com­pa­ny elim­i­nat­ed about 2,800 jobs.

In July, it laid off about 570 peo­ple as part of its out­sourc­ing of man­u­fac­tur­ing. In August, it cut anoth­er 784 jobs to cut costs.

The lay­offs bring Pelo­ton’s work­force to about 3,825, cut­ting more than half this year. With the job cuts, how­ev­er, “much of the restruc­tur­ing is com­plete,” McCarthy said.

But Pelo­ton plans to close most of its North Amer­i­can retail stores start­ing next year, and fur­ther cuts are expected.

McCarthy said Pelo­ton need­ed a change after los­ing more than $100 mil­lion in retail oper­a­tions last year.

Pelo­ton boomed in busi­ness after the out­break of the COVID-19 pan­dem­ic as peo­ple sought ways to work out at home.

But as the world opened up again and peo­ple returned to offices and gyms, Pelo­ton was left with excess inven­to­ry, which took a toll on busi­ness. It post­ed an oper­at­ing loss of 1.2 bil­lion yen in the April-June period.

As Bloomberg points out, McCarthy sees sub­scrip­tions, part­ner­ships and mak­ing con­tent more wide­ly avail­able on third-par­ty devices for Pelo­ton’s suite of fit­ness class­es and ser­vices as key to increas­ing revenue.

The com­pa­ny has start­ed sell­ing its con­nect­ed fit­ness gear through Ama­zon and will soon be avail­able at Dick­’s Sport­ing Goods. It has also start­ed rent­ing bikes and announced a smart row­ing machine.

“A key aspect of Pelo­ton’s trans­for­ma­tion jour­ney is opti­miz­ing effi­cien­cies and reduc­ing costs, sim­pli­fy­ing oper­a­tions and achiev­ing break-even cash flow by the end of the finan­cial year , we have made the dif­fi­cult deci­sion to reduce our head­count by approx­i­mate­ly 12%,” a Pelo­ton spokesper­son told Engad­get in a statement.

“This will result in the reduc­tion of approx­i­mate­ly 500 glob­al team mem­bers. Deci­sions such as these are extreme­ly dif­fi­cult and Pelo­ton is doing every­thing pos­si­ble to help our affect­ed colleagues.

As a foothold for growth, today marks the com­ple­tion of a large part of our restruc­tur­ing plan, which we start­ed in Feb­ru­ary 2022.”