Peloton is cutting another 500 jobs in its fourth round of layoffs this year

For the fourth time this year, Peloton has announced a round of layoffs. The struggling fitness company is shedding another 500 jobs, CEO Barry McCarthy said CNBC. In a memo to employees, McCarthy wrote that the company must take the step as part of an effort to reach breakeven cash flow by the end of Peloton’s fiscal 2023 (that is, by the end of next June).

“I am very aware that many of those affected by these changes are not only colleagues but also close friends,” McCarthy wrote in the memo Bloomberg receive. “I know many of you will be angry, frustrated and emotionally drained by today’s news, but please know that this is a necessary step if we are to save Peloton, and we are.”

The recent cuts account for roughly 12 percent of Peloton’s headcount. In February, when McCarthy took the job, the company cut about 2,800 jobs. In July, Peloton laid off about 570 employees as part of a move to outsource all manufacturing. A further 784 jobs were then cut in August to cut costs.

Given that Peloton has around 3,825 employees after the most recent round of layoffs, that means the company has cut its headcount by more than half this year. However, McCarthy noted that with these cuts, “the bulk of our restructuring work has been completed.”

However, Peloton plans to close most of its retail stores in North America starting next year, likely leading to further cuts. McCarthy noted that Peloton lost more than $100 million at its retail operations last year, so changes are needed.

Peloton experienced a business boom following the outbreak of the COVID-19 pandemic as people sought ways to train at home. However, as the world has reopened and people have returned to offices and gyms, Peloton has been left with excess inventory and business has taken a significant hit. In the April-June quarter, the company suffered an operating loss of $1.2 billion. As Bloomberg notes that McCarthy sees subscriptions to Peloton’s suite of fitness classes and services, partnerships, and the wider availability of content on third-party devices as key to driving revenue.

The company has started selling its connected fitness gear through Amazon, and the products will soon be available at Dick’s Sporting Goods. Peloton has also started offering its bike for rent and announced a smart rowing machine.

“A key aspect of Peloton’s transformation is optimizing efficiencies and implementing cost savings to simplify our business and achieve breakeven cash flow by the end of our fiscal year. With that in mind, we have made the difficult decision to reduce our workforce by approximately 12 percent,” a Peloton spokesperson told Engadget in a statement. “This will result in the reduction of approximately 500 team members worldwide. Decisions like these are incredibly difficult, and Peloton is doing everything we can to help our impacted colleagues. As we transition to growth, today marks the completion of the vast majority of our restructuring plan, which we began in February 2022.”

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