Peloton’s founder resigned from the company on Monday – less than three weeks after the exercise business he created, which saw him become a billionaire during the pandemic, reported a $1.2 billion quarterly loss and a nearly 30 percent drop in revenue.
John Foley, 51, launched the fitness firm in 2012, with the first studio in Manhattan in which instructors led classes that were also beamed into members’ homes.
It went public in September 2019, and the pandemic saw demand surge as gyms closed and millions begin to exercise in their homes.
But the surge in popularity was swiftly followed by a collapse in demand – not helped by scandals surrounding safety, with the recall of their treadmills after a child died, and bad publicity from a much-mocked Christmas advert, and Sex and the City’s male lead Mr Big dying from a heart attack following a Peloton class.
Foley will be succeeded as board chair by Karen Boone, a former executive at Restoration Hardware and a Peloton board member since 2019.
Peloton founder John Foley, 51, resigned on Monday as the company struggles to cope with people exercising less at home post-pandemic
Sex and the City’s Mr Big, played by Chris Noth, dies after having a heart attack following a Peloton class
The popularity of Peloton surged during the pandemic, but has dramatically declined in the months since COVID’s peak
Peloton said its chief legal officer, Hisao Kushi, and chief commercial officer, Kevin Cornils, are also leaving.
Kushi will be replaced by Tammy Albarran, a deputy general counsel from Uber, but Cornils will not be replaced.
Barry McCarthy, Peloton’s CEO – a former finance executive at Spotify and Netflix, who took over the reins from Foley in February – thanked Foley for his work.
‘I would like to offer my gratitude to John and Hisao for their shared vision, dedication, and passion for Peloton,’ he said.
‘Through their hard work, they have given the world the connected fitness industry and created a platform that empowers each of us to be the best version of ourselves. We are indebted to them for their countless contributions.’
Foley said he was proud of the company he helped build.
‘As I reflect on the journey Peloton has been on since we founded it, I am so proud of what we have built together,’ he said.
‘We founded the company because we wanted to make fitness and wellness convenient, fun, and effective. Because of the work of thousands of people, we’ve done that.’
Peloton’s value surged during the pandemic, with shares at $160 – but today they are worth $11
The company’s value has dropped dramatically over the last year
He said he was embarking on ‘a new professional chapter.’
‘I have passion for building companies and creating great teams, and I am excited to do that again in a new space,’ he said.
He added that he was ‘leaving the company in good hands’ but would continue as a Peloton user – concluding: ‘I’ll see you on the leaderboard.’
A source told Yahoo Finance that Foley – who along with his wife and other insiders controls close to 60 percent of Peloton’s voting shares – may sell his stake in the company after a cooling-off period.
On August 25, Peloton reported a $1.2 billion loss – its sixth consecutive quarter of reported losses – which sent shares tumbling 15 percent.
Once a pandemic darling, Peloton has struggled with sinking demand for its products and services as people opt to head back to gyms instead of burning calories in their homes, as was the case during lockdowns.
Sales fell to $678.7 million from $936.9 million a year earlier.
‘The loss reflects the substantial progress we made this last quarter re-architecting the business to reduce the current and future inventory overhang, converting fixed to variable costs, and addressing numerous supply chain issues,’ said McCarthy, the CEO, in a letter to shareholders.
The move marks the latest measure by the fitness firm’s Chief Executive, Barry McCarthy (pictured), to expand its consumer base and increase cash flow
Embattled stationary bike seller Peloton has struck up a partnership with Amazon to sell its fitness equipment on the online retailer
The company’s exercise bikes – priced at above $1,400 – plus its treadmills and connected classes were all the rage among fitness enthusiasts during COVID-19 lockdowns.
But as gyms reopened following vaccinations demand nosedived.
In response, the company has tapped technology industry veterans as chief executive officer and chief financial officer.
Since taking over in February, McCarthy has focused on cost cuts through layoffs and store closures, outsourcing manufacturing and slimmer inventories.
‘I think Q4 will have been the high water mark for write-offs and restructuring charges related to inventory and supply chain issues and the beginning of the comeback story for Peloton,’ McCarthy said in his letter.
Excluded from the association with Amazon, however, are some of the sellers more premium products, such as its Bike+ machine (at left), which starts at $2,495, and its even more pricey Tread treadmill, which costs at least $3,495
The day before the terrible results were announced, the embattled bike seller struck up a partnership with Amazon to claw back lost profits.
The move marked the fitness giant’s first foray into third-party selling after maintaining a direct-to-consumer model for the past decade.
Meanwhile, management told employees this month they are slashing 784 jobs, increasing equipment prices, closing retail locations, and requiring employees to return to the office by November, as they try to secure their bottom line.
‘We have to make our revenues stop shrinking and start growing again,’ McCarthy told staff.
‘Cash is oxygen. Oxygen is life.’
He added he hopes the decisions will ‘better position the company for long-term success.’