Peloton cuts 500 jobs, has 6 months to prove it can grow, CEO says

Peloton is cutting another 500 jobs in a move that CEO Barry McCarthy said should position the struggling fitness equipment maker to return to growth.

The cuts, which amount to about 12% of Peloton’s workforce, mark a pivot point for the company, McCarthy told CNBC on Thursday. Peloton already has had multiple rounds of layoffs this year.

“The restructuring is done with today’s announcement,” he said. “Now we’re focused on growth.”

McCarthy said the company now has to prove its recent spate of strategy changes, including equipment rentals and partnerships with Amazon and Hilton, can help it grow.

Shares of Peloton were up 4% in morning trading. The stock is down about 76% so far this year.

McCarthy took over as CEO of Peloton earlier this year from co-founder John Foley, and has overseen drastic changes to its business model as the company struggled after a sales boom earlier in the Covid pandemic. A former Spotify and Netflix executive, he has pushed the company’s business further into subscriptions while broadening the availability of its products beyond Peloton’s direct-to-consumer roots.

Earlier this week, the company said it would put its bikes in every Hilton-branded hotel in the United States. It recently announced partnerships to sell equipment in Dick’s Sporting Goods stores and on Amazon.

McCarthy talked to CNBC after The Wall Street Journal reported on remarks he made about where the company could stand in six months.

“We need to grow to get the business to a sustainable level,” McCarthy told the Journal, which first reported on the layoffs.

But even beyond that point, McCarthy told CNBC that Peloton, which has slowed the rate of its cash burn, would still be “extremely well capitalized” and “highly liquid.” And it’s still on track to meet its cash flow goals for the fiscal year.

“I’m feeling about as optimistic as I’ve ever felt,” he said, reflecting on the changes the company made over the past several months.