Peloton cuts 500 jobs and has 6 months to point out the way it can develop, CEO says

A man walks in front of a Peloton store in Manhattan on May 05, 2021 in New York.

John Smith | Corbis News | Getty Images

Peloton has six months to show its recent series of strategy changes, including equipment rentals and partnerships with Amazon and Hilton, can help the company grow, CEO Barry McCarthy told CNBC on Thursday.

Peloton also plans to cut 500 jobs, or about 12% of its workforce, he said. The connected fitness company has already had several rounds of layoffs this year, but McCarthy said he doesn’t expect any more job cuts any time soon. “We’re done,” he told CNBC.

Shares of the fitness products company were volatile in premarket trading. The stock is down about 76% so far this year.

Thursday’s developments mark a turning point for Peloton. “The restructuring is complete with today’s announcement,” McCarthy said. “Now we focus on growth.”

McCarthy has overseen drastic changes to Peloton’s business model this year as the company struggled with sales following a boom in the early days of the Covid pandemic. A former Spotify and Netflix executive, he has oriented the connected fitness company’s business toward subscriptions while expanding the availability of its products beyond Peloton’s direct-to-consumer roots.

Earlier this week, the company announced that it would place its bikes in every Hilton-branded hotel in the United States. The company recently announced partnerships to sell gear at Dick’s Sporting Goods stores and on Amazon.

McCarthy spoke to CNBC after The Wall Street Journal reported on comments he made about where the company could be in six months.

“Unless we grow,” McCarthy, who took over as CEO from co-founder John Foley earlier this year, told the Journal, “we need to grow to bring the business to a sustainable level.” The Journal also had about first reported the layoffs.

Beyond that point, the company, which has slowed its cash burn, is “extremely well capitalized” and “highly liquid,” McCarthy said in an interview with CNBC. And it’s still on track to hit its cash flow targets for the fiscal year.

“I’m feeling more optimistic than ever,” he said, reflecting on the changes the company has made over the past few months.