Peloton is keeping on slashing jobs, and the recent layoffs were the fourth time this year. The organization is cutting another 500 jobs after reporting six straight quarterly losses, and according to CEO Barry McCarthy, the company is bound to make this move as they have to break even on the cash flow by the end of Peloton's 2023 fiscal year. He, in fact, stated that he does not understand why people are not happy with his decision.
The recent cuts of the workforce represent about 12 % of Peloton's headcount. In February, the firm eliminated about 2,800 positions, and in July Peloton liquidated about 570 jobs as an act of moving to outsource all production. That didn't stop there as it again cut another 784 jobs in August to cut costs. After the recent layoffs Peloton has about 3,825 employees, which clearly indicates that the company has laid off more than half of its workforce this year. Because of the state currently, Peloton is planning to close most of its retail stores which are likely to lead to further reductions. According to the reports, Peloton has lost $100 million in retail sales and because of this, these changes are required.
"I know many of you will feel angry, frustrated, and emotionally drained by today's news, but please know this is a necessary step if we are going to save Peloton, and we are," McCarthy said in a staff memo viewed by Insider. The subject of the memo read: "A Difficult, But Critical Pivot to Growth."
During the COVID-19 pandemic, home fitness firms boomed during the waves of lockdown as everything outside was closed including Gyms and community centres. Peloton was one of the firms that enjoyed great demand for home-gym equipment and the sales were simply through the roof. Thanks to the sudden huge demand, the company couldn't handle delivery times and even had to recall pedals on around 27,000 bikes after a user got wounded during a workout. Peloton's actual downfall started in March 2021 when a child died in an accident with one of Peloton's treadmills.
The organization is currently heavily reliant on subscription fees, which generate more than half of its revenue. To get back on track the company has announced a few huge changes which will hopefully help drive sales. They are planning to unveil their much-anticipated rower, the cost of which is $3,195. It is also looking to bring its bikes to all the 5,400 Hilton branded hotels in the US and will start the sale of its bike and treadmills in more than 100 D Sporting Goods stores as well as on the websites.
We hope this is a turnaround that the company requires and the mass job-cuts don't go in vain.
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