Following a series of issues for Peloton in recent weeks, the connected fitness company’s top executive is stepping down.
Peloton CEO John Foley announced on Tuesday that he will be stepping into a new role as the company’s executive chair, with former Spotify CFO Barry McCarthy taking over as chief executive. According to Foley, the succession plan has been in the works for months.
The company is also laying off about 2,800 employees across the globe as part of a plan to “position Peloton for long-term success.” These layoffs will affect all levels of the company’s organization, including leadership roles, Foley said.
“I recently shared that we have been in the process of re-evaluating our costs across the entire organization to ensure we are appropriately structured for the post-COVID landscape,” Foley said in an open letter to the Peloton team. “After careful review, we’ll be driving strategic initiatives across our global team that will help us focus on areas that are in need of adjustment, including implementing a comprehensive restructuring program.”
Foley’s wife, Jill Foley, will also be departing from her role as VP of apparel. Peloton president William Lynch will also transition from his role, but will remain on the board in a non-executive director role.
Laid off North American employees will receive cash compensation, an extended period for equity vesting and healthcare coverage, career services, and a complimentary Peloton monthly membership for 12 months.
In its most recent earnings results, Peloton cut its financial outlook for the full year and revealed a net loss of $439.4 million, or $1.39 per share, in Q2. Total revenue grew 6% to $1.13 billion.
Earlier this week, speculation about a possible sale of Peloton abounded, as Peloton stock took a nose dive — shares have fallen about 80% in the past year as the pandemic entered a new phase and consumers returned to the gym. The company said last month it was halting production of bikes and treadmills on slipping demand.
Nike and Amazon were named as possible suitors for Peloton, according to two separate reports. The Wall Street Journal reported that Amazon has reached out to the company about a potential deal. Later, The Financial Times said Nike is considering a bid. (The FT said Nike and Amazon have not held talks with Peloton).
Last week, Blackwells Capital LLC. sent a letter to the Peloton board of directors calling on it to remove CEO John Foley “as a result of his multiple leadership failures.” In addition, the letter asked the board to consider selling the company.