Peloton considers job cuts, store closings during struggles: report
Peloton is considering cutting jobs and closing stores after hiring consulting firm McKinsey & Co., according to a report.
The potential slashings come amidst a spate of bad news for the luxury fitness company, whose exercise treadmills sell for $2,500 and whose chief executive, John Foley, responded poorly to a crisis last year when several young children were injured by the machines and one child was killed.
Now the Big Apple-based company has retained the consulting firm McKinsey & Co. and is exploring closing 15 of its 123 showrooms in the US, Canada, United Kingdom and Germany as well as possibly cutting jobs at its apparel division, according to a CNBC report, which cited anonymous sources and an internal recording of a management call.
The company did not immediately respond for comment.
Foley, who founded Peloton in 2012, has come under fire for a series of tone-deaf moves after the machinery safety crisis.
The executive at first denied that the machines were unsafe if they were used properly and he fought back against a recall by the government only to apologize for his initial response.
In December, Foley and his wife held an exclusive holiday party at The Plaza Hotel – only for some of the company’s staff – shortly after Peloton announced a hiring freeze and moratorium on parties, The Post reported.
Foley denied that the event was an official Peloton party, he told The Post.
“This holiday season, my wife and I hosted a personal party for our vaccinated family and friends to celebrate all NYC has been through over the past two years,” Foley wrote in a companywide email shared with The Post. “Although some Peloton teammates were invited, the event was not officially affiliated with Peloton in any capacity.”
The missteps and Peloton’s financial performance – its market cap has fallen to $10.2 billion, as shares tumbled 76% last year – has cast a pall over the company.
“Morale is at an all-time low,” one employee told CNBC. “The company is spinning out so fast.”
Sales of its pricey equipment and subscriptions to its app have slowed dramatically since 2020, when consumers were big on the company.
Now the company will begin charging fees for delivery and setup of its equipment, Peloton said on Tuesday, citing rising inflation costs.
Beginning Jan. 31, the company will be asking customers to pay an additional $250 for delivery and setup for its Bike, and an additional $350 for its Tread.
In November the company slashed its outlook of the year, due to softening demand for its services and equipment.
Foley, who previously was an executive at Barnes & Noble, recently listed his home in East Hampton for $4.5 million and snatched up another home in the neighborhood for $55 million, The Post reported.