After a tumultuous few months, Peloton is making some changes. The company revealed to The Wall Street Journal today that co-founder and CEO John Foley is stepping down and will become executive chair. Peloton is also planning to cut roughly 2,800 jobs, which equates to 20% of its corporate workforce.
Foley said in an interview that Peloton remains open to “exploring any opportunity that could create value” for the company’s shareholders:
“We are open to exploring any opportunity that could create value for Peloton shareholders,” Mr. Foley said in an interview. Mr. Foley, a former Barnes & Noble Inc. executive who co-founded Peloton 10 years ago last month, declined to comment further.
Barry McCarthy will take over as Peloton’s CEO. McCarthy has previously served as the CFO of both Spotify and Netflix and serves on the board of Spotify and Instacart.
Peloton claims that the company “had long been planning to hire a new CEO” and that McCarthy “entered the picture in the past few weeks.”
“I have always thought there has to be a better CEO for Peloton than me,” said Mr. Foley, 51. “Barry is more perfectly suited than anybody I could’ve imagined.”
“Together we can make a complete grown-up and build a really remarkable business,” Mr. McCarthy said. He has consulted for Peloton investor Technology Crossover Ventures, sits on the boards of Instacart Inc. and Spotify, and was CFO of the music-streaming service until early 2020.
Peloton also plans to cut around $800 million in annual costs and reduce capital expenditures by $150 million. The company is also planning to “wind down the development” of its planned $400 million Output Park factory in Ohio.
Finally, other executive changes include that William Lynch will step down from his role as Peloton’s president but will remain on the board. Erik Blachford, who has served as a director since 2015, will leave the board. Peloton is also adding two new directors: Angel Mendez and Jonathan Mildenhall. Mendez runs a “private artificial-intelligence company focused on supply-chain management” and Mildenhall is the former chief marketing officer of Airbnb.
Peloton also recommitted to improving its profitability and promised to share more details with its upcoming earnings report. In the interim, it reported Q2 revenue of $1.14 billion and 2.77 million subscribers
The report from The Wall Street Journal speculates that the announcement of a new CEO could indicate that Peloton isn’t looking to entertain an acquisition at present time. It’s been rumored that companies like Nike, Amazon, and Apple could all be mulling such a deal.