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• Barry McCarthy, the former CFO of Spotify and Netflix, will take over as CEO and President
• The company intends to lay off 2,800 employees to restructure its business
• Peloton aims to save $800 million in yearly costs and $150 million in capital expenditures this year
The Wall Street Journal reported that Peloton Interactive Inc (NYSE: PTON) plans to replace the CEO and lay off 2,800 employees to restructure its business after a drop in demand.
John Foley, Peloton's co-founder, will stand down as CEO and become executive chair.
Barry McCarthy, the former chief financial officer of Spotify Technology SA (NYSE: SPOT) and Netflix Inc (NASDAQ: NFLX), will take over as CEO and President of Peloton and join the company's board of directors.
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According to the report, the job layoffs are projected to affect around 20% of Peloton's corporate roles but will not affect Peloton's instructor roster or content.
Last month, activist investor Blackwells Capital, which owns about 5% of Peloton, pushed for the CEO's removal and asked the board to begin the sale process to maximize the value of Peloton's brand, team, customer base, and technology, as it would be an attractive acquisition target for more prominent technology or fitness-oriented companies.
However, as of September 30, Foley and other Peloton insiders held a combined voting control of about 80%, making any acquisition hard to complete without their permission.
Read more: Peloton temporarily halts production of fitness products
Board of Directors
Peloton's president, William Lynch, is also set to step down from his executive position but stay on the board, according to Foley in an interview with the Journal. Erik Blachford, who has served on the board since 2015, is set to resign, and two new directors will be appointed.
The Journal reported: new directors are Angel Mendez, who runs a private artificial-intelligence company focused on supply-chain management, and Jonathan Mildenhall, the former chief marketing officer of Airbnb Inc.
Peloton aims to save $800 million in yearly costs and $150 million in capital expenditures this year, the report said.
Read more: Peloton insiders sold shares worth $500 million before the stock’s fall
The firm also stated that it intends to complete the construction of its Peloton Output Park, a $400 million facility in Ohio. It has stated that it will cut the size of its delivery teams as well as the quantity of warehouse space it owns and controls.
Meanwhile, Fitness bike maker shares surged almost 31% on Monday on rumors of buyout interest from Amazon.com Inc (NASDAQ: AMZN) and Nike Inc (NYSE: NKE), and analysts expect that Apple Inc (NASDAQ: AAPL) to enter the bidding battle.
The exit of Foley comes before Peloton's fiscal second-quarter earnings, which are expected after the market closes on Tuesday.
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The firm posted preliminary second-quarter revenue of $1.14 billion and stated it had 2.77 million users at the conclusion of the period.
Source: WSJ
Picture Credits: Forbes