American fitness and media firm, Peloton Interactive, Inc. has laid off 2,800 of its employees and offered them a free twelve-month subscription of its fitness services as part of employee’s severance.
John Foley, Co-founder of Peloton, announced the layoffs in a press release where he also revealed about stepping down from the position of CEO.
Mr. Foley said that after having re-evaluated the costs across the firm’s entire structure to ensure that it is appropriately organized for the post-COVID scenario, the company made this difficult decision of reducing its workforce by 20%, that is 2,800 globally.
Mr. Foley, now executive chair, added that impacted employees will receive a significant cash severance allotment, an extension to their health coverage for a limited duration, career services, and a one-year membership of the firm’s live-streamed exercise classes.
Peloton recorded skyrocketing sales at the peak of the pandemic as gyms were closed due to lockdowns causing fitness enthusiasts to become trapped at home. However, as restrictions eased, the firm’s profits took a huge toll, with the company’s stock plunging by 80% in January last year.
Acknowledging these challenges, Mr. Foley said that while the firm did its best in meeting the unprecedented demand by growing its product portfolio as well as the size of its teams, its post-COVID demand has changed and its previous investments no longer aligns with how it wants to operate the business in future.
Peloton, therefore, also scrapped its plan for building a factory in Ohio, USA, which otherwise would have been its first plant in the country.
Mr. Foley said that the firm decided on cutting down its Peloton Output Park (POP) plan in terms of its manufacturing operations.
Barry McCarthy, who served as the CFO for Netflix and Spotify, has been appointed as the new CEO of Peloton.
Foley said that McCarthy’s appointment was the result of a months-long plan that he had been working on with Peloton’s Board of Directors, and that he looks forwards to working with him as the leader of the firm’s next chapter.