“I know many of you feel angry, frustrated, and emotionally drained by today’s news, but please know that this is a necessary step if we are going to save, Peloton, and we are.” With that message, failed Peloton Interactive Inc. (NASDAQ: PTON) CEO Barry McCarthy, who joined in February, fired another 500 people. It is the fourth layoff of 2022. McCarthy has done more to ruin the company than his bumbling predecessors did. More than at any time since its founding, Peloton is in a position where it may go under or be sold off in pieces.
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McCarthy has had one success. He has been able to jump from one possible solution to Peloton’s problems to another at astonishing speed. Aside from layoffs, he has begun to sell used Peloton equipment, which allows the company to compete with itself. He has shut down manufacturing operations and outsourced this to Taiwan’s Rexon. This gives Peloton less control over quality.
McCarthy has cut a deal to sell rowing and running machines via Dick’s Sporting Goods and has put machines in 5,400 Hilton Hotels. He has raised some prices (oddly, while offering discounted used models) and launched a new, expensive machine. The success of the new product depends on demand, which appears to be nose-diving across the model lines.
For those who may have forgotten, Peloton’s revenue dropped 30% last quarter to $678 million. The company lost $1.2 billion. Most of the trouble has been blamed on Peloton as a “COVID-19 success.” People who could not go to gyms bought exercise equipment. Now, people can go to gyms again. It is rarely mentioned that the machines might be too expensive or one-dimensional pieces of exercise equipment. And Peloton has armies of competition, many of which sell similar equipment at lower prices.
McCarthy’s horrible mistakes continue to pressure Peloton’s stock. The shares were near $40 apiece when he joined. Today they trade at just above $8.
What kind of CEO continues to fire people without admitting to what have been several mistaken changes in strategy? McCarthy, who will manage to take Peloton under.
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