In an attempt to cut costs, Peloton said that it's planning to cut around 12% of its workforce. About 500 employees will lose their jobs, according to Engadget.
The layoff was first reported by The Wall Street Journal which cited CEO Barry McCarthy, saying the cut is company-wide. However, the most affected department is the marketing team.
Peloton Says it's Done With Restructuring, Will Start Focusing on Growth
This is the fourth time this year that Peloton is implementing layoffs as it attempts to cut costs to reach break-even cash flow by the end of the company's 2023 fiscal year.
With the layoffs, the company will be left with only 3,800 employees globally, which is less than half the number of employees it had during its peak last year.
"I am acutely aware many of those impacted by these changes aren't just colleagues but are also close friends," McCarthy wrote in the memo.
He noted that many of the employees might feel angry, frustrated, and emotionally drained by the news about the layoffs. However, he explained that the job cut was a necessary step to save Peloton.
According to Peloton, the job cut "marks the completion of the vast majority of our restructuring plan." The restructuring plan started when McCarthy assumed the CEO post in February 2022.
In an interview with CNBC, McCarthy said that with the job cuts announcement, the restructuring is done, and moving forward, the company will start focusing on growth.
Peloton had reduced costs through job layoffs. The company also decided to outsource all manufacturing and reduce unsold inventory.
McCarthy said that the latest layoffs are the company's last attempt to cut costs. From now on, the company will start focusing on increasing its revenues.
While the decision to lay off employees is incredibly difficult for Peloton, the company said that they are doing their best to help the affected workers.
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Peloton Attempts to Expand its Sales
According to Engadget, starting next year, the company is planning to end the operation of most of its retail stores in North America. When this happens, it will lead to further job cuts.
According to McCarthy, since Peloton lost $100 million on its retail operations last year, the changes in its operation are deemed necessary.
The Guardian noted that Peloton's CEO gives the company another six months or so to turn itself around.
In August, the company lost more than $1.2 billion. This is another dismal quarter for Peloton. In addition, the revenues are down by 30% compared to million the year prior.
Following the poor performance of Peloton, the company laid off 800 employees in the said month. According to McCarthy, this was done in order to become more efficient and cost-effective.
In recent weeks, Peloton attempted to expand its sales. It struck deals with Amazon and Dick's, and put up bikes in 5,400 Hilton Hotels across the U.S.
During the pandemic, Peloton, which was founded in 2012, became an in-demand part of the household.
Related Article: Peloton Increases Prices of Bike+, The Tread; Plans to Cut Jobs Once More
