Barry McCarthy: Peloton, the stationary bike manufacturer that triumphed in the pandemic, replaces its CEO and cuts 2,800 jobs | Economy

A woman follows an interactive class on her Peloton bike in August 2021 at her home in Pittsburgh.
A woman follows an interactive class on her Peloton bike in August 2021 at her home in Pittsburgh.Keith Srakocic (AP)

The static bike manufacturer Peloton Interactive announced on Tuesday an adjustment plan that involves the replacement of the CEO and the dismissal of 2,800 of its workers, the company reported in a statement. Shares of the firm, which hit the ground running during the pandemic and is now in trouble due to lower demand, soared 11% at the opening of the trading session after the restructuring plans were announced. By mid-morning, shares had risen 28%.

The new CEO will be Barry McCarthy, who has sat on the boards of several technology companies in recent years. For a decade, until 2010, Peloton’s new chief executive was Netflix’s chief financial officer. He was also from Spotify, in the eye of the hurricane recently due to the controversy over the content of a popular podcast. Peloton has appointed co-founder and current CEO John Foley to serve as executive chairman of the board.

“I believe Barry is the right leader to lead the company into its next phase of growth. Not only is he recognized as an expert in leading subscription business models, he has also had tremendous success in partnering with the founding CEOs of other brands,” Foley said in a statement. After going through Netflix and Spotify, McCarthy held seats on the boards of Pandora, Eventbrite, Wealthfront, NatureBox or Rent The Runaway.

Foley had drawn the ire of shareholders in recent weeks as the company struggled to maintain the breakneck growth that propelled its valuation to $52 billion in early 2021. Since then, the stock has lost nearly 80% of its value. as the evolution of the pandemic allowed the gradual recovery of activity, including the reopening of gyms. This Monday, the titles took off again due to reports that Amazon was one of the companies considering buying Peloton. Another of the interested companies is the sports equipment giant Nike.

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In addition to the mismanagement that shareholders blame on Foley, negative recommendations from users and gratuitous controversies, such as the one caused by a clearly sexist advertisement, tarnished the name of Peloton as a synonym for a quality product that confers status.

The other big leg of Peloton Interactive’s restructuring program is the layoff of 2,800 people, roughly 20% of its staff. Along with other cost-saving measures, Peloton expects to cut costs by $800 million (700.5 million euros) annually.

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Peloton has announced the adjustment the same day it published its income statement for the first half of its fiscal year, which ended in December. In that period, the company recorded losses of 815.3 million dollars (713.9 million euros), compared to profits of 132.8 million dollars recorded in the same period of the previous year.

To stem the slide, the company moderated prices to make its bikes more affordable, but the move did little good. In the spring of 2020, in full confinement, hundreds of thousands of buyers paid 2,245 dollars (about 2,000 euros) for a Peloton bicycle connected to the internet, which shot up the company’s income by 66% compared to the previous year. The savings plan will not affect your prestigious list of instructors from fitness and interactive online content, which in May 2020 added one million subscribers, totaling more than 2.5 million enthusiasts. Peloton is suspending plans to build a factory in Ohio, where it planned to invest some $400 million and hire some 2,000 people in the coming years.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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