Peloton (PTON) chief executive officer John Foley is stepping down as the connected fitness company announces plans to cut 2,800 jobs and restructure its business amid waning demand for its treadmills and exercise bikes.
Barry McCarthy, the former chief financial officer of Netflix (NFLX), will become CEO and president and join Peloton’s board in the wake of Foley’s departure.
The job cuts are expected to impact about 20% of Peloton’s workforce, but won’t affect Peloton’s instructor roster or content, according to media reports. The company employed 6,743 people in the U.S. as of June 30, more than double the roughly 3,281 employees it had a year ago.
Peloton shares were down more than 4% in premarket trading having closed yesterday (February 7) up nearly 21%. The stock is down 31% year-to-date.
The news of Foley stepping down comes ahead of Peloton’s fiscal second-quarter results, which are scheduled to be reported after the market closes on today (February 8).
The job cuts are part of Peloton’s efforts to cut roughly $800 million U.S. in annual costs and reduce capital expenditures by roughly $150 million U.S. this year.
As part of that goal, the company also said that it plans to wind down the development of its Peloton Output Park, a $400 million U.S. factory that it was building in Ohio.
Roughly a week ago, activist Blackwells Capital — which has a 5% stake in the company — sent a letter to Peloton’s board urging Foley to quit his role as CEO and asking the company to consider selling itself.
Reports have since circulated that potential suitors could include Amazon (AMZN) or Nike (NKE). However, Foley along with other Peloton insiders had a combined voting control of roughly 80% as of September 30, which would make it practically impossible for any deal to go through without their approval.
Foley, 51, founded Peloton in 2012. He will remain as executive chair of Peloton’s board of directors after stepping down as CEO, the company said.
Peloton’s market value had surged to roughly $50 billion U.S. about a year ago but was recently hovering around just $8 billion U.S. before news over takeover talks started circulating.
