The co-founder of Peloton is stepping down as chief executive after an extended streak of tumult at the exercise and treadmill company. John Foley first pitched the idea of an interactive exercise bike in 2011, hoping to disrupt the industry. Now, he'll give up his CEO position and become executive chair at Peloton Interactive Inc. Barry McCarthy, who served as CFO at Spotify, as well as at Netflix, will take over the CEO position, per the AP. Peloton had been the subject in media reports this week of a potential takeover target by either Amazon or Nike. The developments Tuesday deflated hopes for such a deep-pocketed buyer, and shares of Peloton slumped 7% before the opening bell.
The company's shares have been on a roller-coaster ride since the pandemic began. They surged more than 400% in 2020 as COVID-19 forced lockdowns and shifted the workout trend from the gym to the home. In 2021, the shares gave back nearly all of those gains as businesses reopened and people started heading back to gyms. The stock fell further this year amid reports the company would cut back production of bikes and treadmills to try to offset a decline in sales. There was also a demand late last month from activist investor Blackwells Capital that Peloton remove Foley as CEO and that it consider selling the company amid waning consumer demand.
Peloton also announced 2,800 job cuts globally, including approximately 20% of corporate jobs at the New York City company. The instructors who lead interactive classes for Peloton won't be included in cuts, nor will the content that the company relies on to lure users. Peloton is looking to reduce its planned capital expenditures for this year by about $150 million. The restructuring program is expected to result in approximately $130 million in cash charges related to severance and other exit and restructuring activities, and $80 million in noncash charges. The majority of the charges will be recorded in fiscal 2022. The company anticipates at least $800 million in annual cost savings once its actions are fully implemented.
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