Peloton has announced a massive overhaul, including 784 layoffs, price hikes for its bikes and treadmills, and the shuttering of storefronts in 2023.
The changes, announced in a Friday memo to employees, come as shares for the company plummeted by 90% over the last 12 months. The reopening of gyms after pandemic restrictions were lifted blunted the remote-exercise boom the company had previously enjoyed.
“We have to make our revenues stop shrinking and start growing again. Cash is oxygen. Oxygen is life,” said Peloton CEO Barry McCarthy in the memo cited by Bloomberg.
The job cuts are coming from the company’s customer service and warehouse distribution divisions.
Around half the customer service team, based mainly in Plano, Texas, and Tempe, Arizona, will be laid off. Peloton will augment the now-shrunken customer service department with third-party firms.
On the distribution side, 16 warehouses will be closed. Deliveries will now fully be handled by third-party logistics firms that the company already works with.
This week’s cuts are the third such round of layoffs this year. In February, when Mr. McCarthy took over as CEO, 2,800 jobs, around 20% of the corporate positions, were cut, according to CNBC.
In July, Peloton halted plans to build a production plant in Ohio and ceased all in-house manufacturing at plants in Taiwan, cutting 570 jobs. They opted instead for a third-party partnership with Taiwan’s Rexon Industrial, according to CNBC.
Starting in 2023, the company’s retail footprint will also be evaluated and pared back. Peloton currently operates 86 storefronts in North America.
“We need to be where our customers are when they make purchasing decisions. Increasingly they do that online,” Mr. McCarthy told Bloomberg.
Prices for the company’s bikes and treadmills are also going back up; the prices had been slashed in April.
The cost of a Peloton “Bike+” is going up by $500 to $2,495, while the price of a treadmill is going up $800 to $3,495, higher than it was before the April cuts. The price cuts were a move to generate cash flow and quickly move through a backlog of units.
“I probably wouldn’t have messed with the prices at all if I had been confronted with different inventory states back when we lowered the pricing,” Mr. McCarthy explained to Bloomberg.
For those employees spared by the layoffs, new changes to the work-from-home policy have been announced.
Employees will be required to come into the office three times a week starting Sept. 6, and will have to return full-time to the office by Nov. 14, according to the Daily Mail.