Peloton plans to raise the prices of some products, eliminate its North American warehouses, close stores and cut jobs as part of a cost-cutting strategy, the company said Friday.
The stationary bike maker, which has found success during the pandemic only by battling excess inventory as people returned to gyms, will cut about 784 jobs by shrinking its retail footprint and ending its last-mile delivery network, according to partners. the statement said. It did not say how many of its 86 stores in North America would be closed.
“This is a tough choice because we impact people’s lives,” Barry McCarthy, Peloton’s CEO, wrote in a memo to employees seen by The New York Times. “These changes are essential if Peloton is ever going to become cash positive.”
The company will publish the fourth quarter profit on August 25.
After cutting the price of some products in April, Peloton said Friday that it will raise the price of its Bike+ model by $500 and its Tread model by $800.
The company also set a mandatory deadline of November 14 for employees to return to the office at least three days a week.
Last month, Peloton announced that it would outsource its production to a foreign company. In February, Peloton founder John Foley stepped down as CEO and was replaced by Mr. McCarthy. The company laid off 20 percent of its workforce that month, about 2,800 employees.
The company experienced a surge in demand in the spring of 2020, becoming a pandemic darling, before interest waned as gyms reopened. This year, Peloton temporarily halted production of bikes and treadmills, and its losses deepened.
Negative television portrayals also hit the share price. In December, Mr. Big, a character in the “Sex and the City” revival show, died after working on a Peloton bike. Then the lead character of the Showtime drama “Billionaires” suffered a heart attack while riding a peloton bike during the show’s Season 6 premiere.
“Overall, I remain optimistic about Peloton’s future,” Mr. McCarthy wrote in his employee memo. “That doesn’t mean there won’t be challenges ahead. There will be and will be unforeseen setbacks. This is the nature of the turnaround. But I am confident that we can overcome the challenges.”