Peloton has removed its chief executive and said it will cut thousands of jobs in an attempt to fend off pressure from an activist investor to sell the luxury fitness company.
John Foley, Peloton’s founder and chief executive, will step down after criticism that he failed to capitalise on a pandemic-driven boom in demand for the company’s at-home bikes and treadmills.
It will also cut around 2,800 staff – one in five corporate roles – in a cost-cutting drive designed to save $800m (£591m) a year.
Peloton, a darling of the pandemic, has been thrown into crisis by a drop in demand towards the end of last year that has seen it cut production and sent shares down by three quarters. Its plight has attracted pressure from activist investor Blackwells Capital, which has urged it to fire Mr Foley and explore a sale to companies like Apple, Disney and Nike.
Both Nike and Amazon are reportedly considering a bid for Peloton, news that has sent shares soaring this week.
On Tuesday, Peloton cut full-year forecasts in a new sign that the company is struggling as gyms reopen. It said it expected to have around 3m paying subscribers by the end of its financial year, against a prediction of 3.4m made three months ago. It said quarterly revenue had risen 6pc to $1.1bn (£810m) and swung to a $439m loss.
Mr Foley will be replaced as chief executive by Barry McCarthy, the former chief financial officer of Spotify and Netflix.
He will become executive chairman, with Peloton rejecting demands that the company remove him completely.
Karen Boone, Peloton’s lead independent director, said succession planning had been under way for months, before the activist became involved.
She said: “Today’s leadership changes are the culmination of a succession planning process that the board and John have worked on together over the last several months. We all agree that Barry is uniquely suited to lead Peloton into its next chapter and that this leadership transition will best position Peloton for sustainable growth, profitability, and long-term success.”