Peloton lays off 400 employees as CEO Barry McCarthy steps down

Peloton reported it is planning a layoff that would affect 15% of Peloton’s global staff which will impact about 400 people across its global workforce, amid plans to keep the staff count flat and cut spending amid growing concerns about cash flow through to 2025.

This is coming as Peloton CEO, president, and board director Barry McCarthy is also stepping down after two years in the role. This reduction will however affect about 15% of Peloton’s total workforce and comes after the company’s first major layoff of 2,500.

Barry McCarthy provided more context in a letter to shareholders, saying these layoffs are part of a “restructuring” to reduce expenses by $200 million annually, and “align our cost structure with the current size of our business”. While the full restructuring might take up to 12 months, majority of the cost restructuring is taking place immediately, and “when fully implemented, we expect to reduce our team size by approximately 15%, or roughly 400 global team members.

The Great Layoff

Peloton is far from being the only company to undergo layoffs this year. In the past few months, Facebook’s parent company, “META” did cut jobs. So did companies like Lyft and Uber Technologies. In this year 2023, countless companies such as Glassdoor, Walmart, Amazon, Citigroup, Twitter, Yahoo, and Meta, just to mention a few, have all eliminated large percentages of their staff.

Where is the saved Money Going?

Peloton Bike
Compact footprint
Compact 4′ x 2′ footprint

Peloton said in a separate announcement it will lay off about 15% of its global workforce, or 400 employees, as the company hopes to reduce annual spending by more than $200 million by the end of the 2025 fiscal year.

Experts have suggested that Peloton’s decision to downsize its workforce seems to align with a new cost-cutting strategy in the tech industry generally under the Biden administration. By reducing staff, the company aims to improve its performance and solidify its position within the fitness industry.

Others suggested that companies are beginning to rethink hiring more staff due to the fears of looming recession and higher inflation, especially in the United States. This led to a decrease in hiring activities and Peloton is beginning to experience a reduction in demand on customers’ side.

What is Peloton Saying?

The latest cut of 400 staff accounts for 15% of Peloton’s team. Peloton could be quoted in the email sent to staff saying it moved forward with layoffs because it “simply had no other way to bring its spending in line with its revenue”. Peloton has always stated that the company sometimes overestimated demand for its bikes and treadmills and planned to halt production temporarily.