Peloton trims workforce by 11% amid cost-cutting measures
What's the story
Peloton Interactive Inc., the beleaguered fitness technology firm, has performed a major downsizing, cutting 11% of its workforce. The decision was communicated internally to staff by CEO Peter Stern on Friday, according to Bloomberg. The majority of the layoffs are expected to affect engineers working on technology and enterprise customer initiatives. The move comes after last year's launch of new AI-powered bikes and treadmills, which have seen lackluster sales so far.
Strategy
Layoffs part of strategy to save $100 million
The layoffs are part of a previously announced strategy to save $100 million, a Peloton spokesperson said. The plan includes reducing spending, "reshaping our teams and, in some cases, the locations where we work." The spokesperson added that these actions would "evolve our operational footprint and create efficiencies that enable us to continue investing in areas that support our return to growth."
Support
Challenges since pandemic
The Peloton spokesperson also emphasized their gratitude for the contributions of the departing employees and a commitment to support them through this transition. The company has been facing challenges since the end of pandemic lockdowns, with people returning to outdoor and gym workouts. Despite recent tech upgrades, growth has remained elusive for Peloton.
Changes
Upgraded equipment and price hikes
Last year, Peloton unveiled upgraded equipment including new versions of the Bike, Bike+, Tread, and Tread+, as well as a Row to replace its previous rowing machine. All these machines came with Peloton IQ, an AI platform providing personalized guidance, insights, and coaching plans. The company also hiked prices across its portfolio by an average of 11% for equipment and about 19% for subscription fees.
Concerns
Price hikes and product recall concerns
Analysts had raised concerns that Peloton's price hikes could hurt its chances of attracting new members, especially in a volatile economy. Not long after the increases, Peloton voluntarily recalled about 877,800 units of its previous high-end Bike model in the US and Canada. The recall was due to reports of some seat posts breaking off and causing riders to fall off their bikes.