Slumping Peloton replaces CEO, cuts 2,800 jobs

Peloton saw growth slow with the end of widespread Covid-19 lockdowns

Slumping home-exercise company Peloton announced Tuesday a leadership shift and layoff plan as it scales back expansion plans due to weakening demand in the shifting pandemic.

Founder John Foley will step down as chief executive but remain as executive chairman. Under a cost-cutting plan, the company will eliminate 2,800 jobs in an acknowledgement that it expanded too quickly.

Foley will be replaced by Barry McCarthy, former chief financial officer at Spotify and Netflix.

Annual costs are expected to fall "at least" $800 million as the company cuts corporate positions by 20 percent, Peloton said.

Executives Tuesday depicted the overhaul as intended to capitalize on long-term growth, even if the short-term is bumpier.

Woodworth said the company had miscalculated growth due to the unpredictability of the pandemic, which has more recently led to many consumers returning to gyms.

- Slower growth seen -

The company also trimmed its full-year revenue forecast and its estimate for connected fitness subscriptions. 

"We scaled too quickly," Foley said. "We own this. I own this and we are holding ourselves accountable. That starts today."

The announcements did not allay criticism from Blackwells Capital, which has called for Foley's ouster and a potential sale of the company.

Neil Saunders, managing director of GlobalData, said new CEO McCarthy should first cut costs and then look for a merger partner if a suitable buyer steps up.

Shares surged 25.3 percent to $37.27.

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