Peloton Interactive Inc (NASDAQ:PTON) is set to cut 2,800 jobs —about 20% of its workforce— and appoint ex-Netflix Inc (NASDAQ:NFLX) Barry McCarthy as CEO as of Tuesday. The move is intended to revive the flailing company.
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Bolstering
As reported by CNN Business, Peloton is undergoing a major restructuring program that includes cutting jobs and replacing CEO John Foley with former Netflix and Spotify Technology SA (NYSE:SPOT) boss, Barry McCarthy. Foley is set to become the company’s executive chair.
By cutting about 20% of its corporate staff, Peloton is seeking to level matters off as it will also reduce the number of warehouses and seek third-party providers. This move alone could save the company up to $800 million every year.
In a press release, the company said: “This restructuring program is the result of diligent planning to address key areas of the business and realign our operations so that we can execute against our growth opportunity with efficiency and discipline.”
Potential takeover talks by the likes of Apple Inc (NASDAQ:AAPL) and Amazon Inc (NASDAQ:AMZN) sent the stock up by 20% on Monday trading.
“In Crisis Mode”
The restructuring plan also involves key changes in the company’s board of directors, with the inclusion of former Cisco Systems Inc (NASDAQ:CSCO) Angel Mendez, and ex Airbnb Inc (NASDAQ:ABNB) Jonathan Mildenhall.
“Peloton's shares have plunged more than 80% from their high in January 2021. They've come under renewed pressure in recent weeks following a report that the company had stopped manufacturing new bikes and treadmills,” CNN reports.
Neil Saunders, managing director of GlobalData, said in a note to investors Tuesday that Peloton is "now a business in crisis mode."
"Peloton has spent vast amounts of money on stores, factories, warehouses, and other facilities to service demand that is now unlikely to materialize. The first step of the new CEO, Barry McCarthy, should be to slash costs to right-size the business,” he added.
The company also said that the announcements will have no impact on on-camera instructors and content. Peloton will also reveal its earnings report for the last quarter on Tuesday.
