Peloton plans to raise the price of some products, eliminate its North American warehouses, close stores and cut jobs as part of a cost-cutting strategy, the company said Friday.
The stationary bike maker, which had huge success during the pandemic struggling with excess inventory as people returned to gyms, will cut about 784 jobs by reducing its retail footprint and ending its last-mile delivery network, relying instead on of partners, a statement said. It didn’t say how many of the 86 stores in North America it would close.
“These are tough choices because we have an impact on people’s lives,” Barry McCarthy, Peloton’s CEO, wrote in a note to employees, which was reviewed by The New York Times. “These changes are essential if Peloton is ever going to be cash flow positive.”
The company will report its fourth quarter results on August 25.
After Peloton lowered the price of some of its products in April, he said Friday it would increase the price on its Bike+ model by $500 and on its Tread model by $800.
The company also set a mandatory November 14 deadline for employees to return to the office at least three days a week.
Last month, Peloton announced that it would outsource its production to a foreign company. In February, John Foley, one of Peloton’s founders, stepped down as chief executive and was replaced by Mr. McCarthy. The company laid off 20 percent of its staff that month, some 2,800 employees.
The company peaked in demand in the spring of 2020 and became a pandemic darling, before interest waned as gyms reopened. This year, Peloton temporarily halted production of its bicycles and treadmills, exacerbating losses.
Negative television images also hit the stock price. In December, Mr. Big, a character on the revival show “Sex and the City,” after training on a Peloton bike. Then a main character in the Showtime drama “Billions” suffered a heart attack while riding a Peloton bike on the show’s Season 6 premiere.
“Overall, I remain optimistic about the future of Peloton,” Mr. McCarthy wrote in his employee memo. “That doesn’t mean there aren’t challenges ahead. There will and will be unforeseen setbacks. That is the nature of turnarounds. But I am convinced that we can overcome the challenges.”
