US Markets
Thursday, May 2nd, 2024 4:02 pm EDT
Key Points
- CEO Barry McCarthy stepping down and Peloton laying off 15% of its staff due to the need to align spending with revenue.
- McCarthy to become a strategic advisor, with Karen Boone and Chris Bruzzo serving as interim co-CEOs while the company seeks a permanent CEO.
- Peloton announcing a broad restructuring plan to cut global headcount by 15%, reduce expenses, and realign its cost structure to achieve sustained positive free cash flow.
Peloton announced significant changes in its leadership and operations, indicating CEO Barry McCarthy’s departure and a strategic shift to realign spending with revenue. McCarthy, a former executive at Spotify and Netflix, will transition to a strategic advisor role while interim co-CEOs Karen Boone and Chris Bruzzo oversee operations. The company plans to reduce its global workforce by 15% and implement structural changes to streamline expenses, aiming to save over $200 million annually by fiscal 2025. These adjustments primarily involve payroll reductions, decreased marketing expenses, and a smaller retail footprint, with a focus on sustaining positive free cash flow. However, Peloton reported disappointing fiscal third-quarter results, including a net loss and lower-than-expected revenue, prompting a downward revision of its outlook for paid subscriptions and revenue. Despite challenges, Peloton aims to enhance its financial position by focusing on profitability and refining its business model. The company anticipates modest positive free cash flow in the near term, driven by cost reductions and ongoing innovation efforts. Notably, Peloton faces hurdles in its hardware sales, with declining revenue from connected fitness products reflecting shifting consumer preferences post-pandemic. As Peloton navigates these changes, it seeks a new CEO to lead the company through its next growth phase, emphasizing the importance of innovation and sustainable financial performance in a competitive market landscape.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/05/02/peloton-ceo-barry-mccarthy-steps-down-15percent-of-staff-laid-off.html
