After a tumultuous ride of ups and downs over the last two years, Peloton co-founder John Foley is stepping down as chief executive. The at-home fitness equipment company also announced on Tuesday that it would cut nearly 3,000 jobs globally.
Foley, who has led the company for its entire 10-year existence, will become Peloton’s executive chairman. Barry McCarthy, who is the former chief financial officer of Spotify Technology SA and Netflix Inc., will step into Foley’s former role.
“This appointment is the culmination of a months-long succession plan that I’ve been working on with our Board of Directors, and we are thrilled to have found in Barry the perfect leader for the next chapter of Peloton,” Foley said in an open letter published Tuesday. “I look forward to working with him and invite you to welcome him with open arms.”
Peloton is also laying off 2,800 employees, which represents roughly 20 percent of the company’s corporate workforce. Cuts will come “at every level of the organization.”
In addition to Foley, Peloton’s president of five years, William Lynch, will be transitioning to a non-executive director role on the company’s board. Foley also announced that his wife, Jill Foley— who has served as VP of Apparel at the brand—will be transitioning away from the role.
The new changes arrive at a crucial time for Peloton, which has been trying to regain its footing after making remarkable gains amid the COVID pandemic. In 2020, the company’s shares surged more than 400 percent amid lockdowns, which included gyms. Nearly all of those gains were erased by the following year when vaccines against COVID became available and people started returning to the gym.
“For many of us, the last two years have been a whirlwind of a learning experience,” Foley said in the memo. “We navigated COVID-19 together, did our best to meet unprecedented demand, increased the size of our team, and grew our product portfolio. But with this growth, we have also faced our fair share of challenges / pivots / the unexpected.”
The company also said it lost $439 million in its most recent quarter, and it lowered its full-year forecasts for revenue, profitability, and subscriptions, the New York Times reports.
In recent days, there were reports that Amazon and Nike had expressed interest in purchasing the company. Foley addressed the reports at the time saying, “We are open to exploring any opportunity that could create value for Peloton shareholders,” according to TechCrunch.
Activist investor Blackwells Capital also shared interest—again—to purchase Peloton despite the leadership changes. On Tuesday, Blackwells said Peloton’s latest actions “do not address any of Peloton investors’ concerns.”
But debating on whether to sell or not and managing leadership changes is just one of the many roadblocks Peloton faces as the company still needs to polish its public image. Last year, the company disclosed that a child had died in an accident involving one of its treadmills. The company initially fought the U.S. Consumer Product Safety Commission’s “urgent warning” to recall its Tread+ machines, which had been linked to dozens of injuries. Foley initially resisted, but later admitted that he had “made a mistake” and apologized for not engaging “more productively with them from the outset.”
In more recent months, Peloton made two unceremonious television cameos in Sex and the City reboot, And Just Like That… and also in Billions in which the characters suffered fictional heart attacks after using the company’s products. One character—Mr. Big—didn’t survive, while the other, Mike “Wags” Wagner, had a luckier fate.
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