Peloton announces layoffs, price increases and store closures as company faces continued challenges in home workout market
Peloton is laying off nearly 780 employees as part of an overhaul that will primarily affect the company’s delivery workers.
In an internal memo sent on Friday, CEO Barry McCarthy wrote that the company was also closing a significant portion of its 86 retail stores from 2023 and immediately raising prices for its home fitness products to ensure better profitability. . After cutting prices earlier this year, Peloton’s Bike+ will increase by $500, to $2,495 and Peloton’s Tread will increase by $800, to $3,495. Prices for Bike v1 and AI-Enabled Strength Training Platoon guide will remain the same.
By also closing its remaining warehouses, Peloton will transfer its “last mile delivery” to third-party suppliers, leading to the current layoffs. McCarthy estimated that this alone would reduce “delivery costs per product by up to 50%”
The move is a marked turnaround from 15 months ago when Peloton, under founder and former CEO John Foley, announced it would spend $400 million to build its first manufacturing plant in the United States Construction of the 200-acre complex was due to begin in 2023, designed to produce Peloton cycles and treadmills and contain offices and a fitness center for employees. At the time, Peloton planned to create more than 2,000 jobs in northern Ohio and capitalize on renewable energy sources to power the plant. Those plans have undoubtedly changed under McCarthy.
Peloton is considered a leader in connected fitness and has recently branched out to wearable technology. At the end of this month of March, Peloton’s losses had increased to $757.1 million from $8.6 million the previous year, while revenue fell to $964.3 million from $1.26 billion. Tonal, an AI-powered home strength machine and competitor to Peloton, cut its workforce by 35% last month.