Peloton co-founder steps down after tough road



The Peloton co-founder will step down as chief executive officer after a long tumultuous period at the treadmill and interactive exercise bike company, which will also cut nearly 3,000 jobs.

John Foley first came up with the idea for Peloton in 2011, hoping to disrupt the industry. He will step down as CEO and become executive chairman at Peloton Interactive Inc.

Barry McCarthy, who has served as CFO at Spotify as well as Netflix, will take over as CEO, the company said Tuesday. Shares rose more than 16% in Tuesday morning trading.

Peloton has been on excursions for the past two years during the pandemic. The company’s stock has surged more than 400% in 2020 amid COVID-19 lockdowns including gyms. Nearly all of that gain was wiped out last year when vaccine distribution forced many people to leave their homes and return to the gym.

This week, it was reported that Amazon or Nike could acquire the company, and those who have been driving the Peloton sale continue to do so this week.

Active Investor Capital Blackwells again asked the company to be sold on Tuesday despite the change in management.

Blackwells sent a presentation to Peloton on Monday that outlined “the mismanagement of the company by John Foley, poor governance and board composition, and reasons to immediately start the sales process.”

In addition to the leadership change, on Tuesday, Peloton announced that it would cut 2,800 jobs, including about 20% of the collective work at the company in New York City. Instructors who lead interactive classes for Peloton will not be cut, nor will the content the company relies on to engage users.

Peloton said it is stopping development at Peloton Output Park in Ohio. It will also reduce its owned and operated warehouse and delivery locations and strengthen its relationships with third parties instead.

Peloton is looking to reduce its planned capital expenditure for this year by about $150 million. The restructuring program is expected to result in approximately $130 million in cash costs related to severance and other restructuring and exit activities and $80 million in non-cash costs. The majority of fees will be recognized in fiscal year 2022.

The company also cut its full-year sales outlook and now expects it to range from $3.7 billion to $3.8 billion. This is down from about $4.4 billion previously to $4.8 billion, which it announced last November. The original projection was $5.4 billion.

Peloton reported a net loss of $439.4 million, or $1.39 per share for the second fiscal quarter ended December 31, 2021, compared with net income of 63.6 million dollars, or 18 cents a share, a year earlier. Total revenue increased more than 6% to $1.13 billion. According to FactSet, analysts were expecting $1.24 per share on sales of $1.14 billion.

In a meeting with analysts, Foley admitted that mistakes were made and that the company invested too quickly.

“We own it. I own it and we are holding ourselves accountable,” said Foley. “That starts today.”

The company expects annual cost savings of at least $800 million once its actions are fully implemented.

Wall Street sees Tuesday’s shakeup as a key moment for Peloton, including the possibility of a sale.

Wedbush analysts Daniel Ives and John Katsingris wrote: “We believe Foley’s departure makes it more likely that Peloton will sell the company and the board clearly has important decisions to take in the days/weeks/ next month”.

But a sale is not guaranteed.

“I think the moves in general do not mean Peloton is in trouble. This, I believe, means they get slimmer, refocused, and independent. Raj Shah, head of technology, media and telecommunications at digital consulting firm Publicis Sapient, said: “Investment from outside companies should be on their agenda, not buying and selling. .

That uncertainty sent shares of Peloton down 7% seconds after the leadership change was announced, with many believing the selling potential had diminished.

However, when the opening bell rang, the company’s shares rose, with many comments pointing to McCarthy’s financial background and ability to strike a deal.

Timothy Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College, said: “Advertising Barry McCarthy with his eyes on the financials makes sense – he’s someone who can see it objectively. Peloton operations and choose where to invest and where to cut business.

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https://www.winknews.com/2022/02/08/peloton-co-founder-steps-down-after-rough-ride/ Peloton co-founder steps down after tough road

Tom Vazquez

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