Peloton announced Thursday that CEO Barry McCarthy will be stepping down and the company will lay off 15% of its staff as it looks to cut costs by $200 million.
McCarthy, a former Spotify and Netflix executive, will become a strategic advisor to Peloton through the end of the year while Karen Boone, the company’s chairperson, and director Chris Bruzzo, will serve as interim co-CEOs. Jay Hoag, another Peloton Director, has been named the new chairperson of the board. Peloton is seeking a permanent CEO.
The company also announced a broad restructuring plan that will see its global headcount cut by 15%, or about 400 employees. It plans to continue to close retail showrooms and make changes to its international sales plan.
The moves are designed to realign Peloton’s cost structure with the current size of its business, it said in a news release.
“This restructuring will position Peloton for sustained, positive free cash flow, while enabling the company to continue to invest in software, hardware and content innovation, improvements to its member support experience, and optimizations to marketing efforts to scale the business,” the company said. “Upon full implementation, the company expects the plan to result in reduced annual run-rate expenses by more than $200 million by the end of its 2025 fiscal year.”
McCarthy took the helm of Peloton in February 2022 from founder John Foley and has spent the last two years restructuring the business and working to get it back to growth.
As soon as he took over, he began implementing mass layoffs to right size Peloton’s cost structure, closing the company’s splashy showrooms and enacting new strategies designed to grow membership. Contrary to Peloton’s founder, McCarthy re-directed Peloton’s attention to its app as a means to capture members who may not be able to afford the company’s pricey Bike or Tread but could be interested in taking its digital classes.
“On behalf of the Board, I want to thank Barry for his contributions to Peloton. Barry joined Peloton during an incredibly challenging time for the business. During his tenure, he laid the foundation for scalable growth by steadily rearchitecting the cost structure of the business to create stability and to reach the important milestone of achieving positive free cash flow,” Boone said in a news release.
“With a strong leadership team in place and the Company now on solid footing, the Board has decided that now is an appropriate time to search for the next CEO of Peloton.”
In a joint statement, Boone and Bruzzo said they are looking forward to “working in lockstep” with the company’s leadership to ensure it “doesn’t miss a beat while the CEO search is underway.”
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