Exercise equipment maker Peloton Interactive Inc (NASDAQ: PTON) on Friday said it is cutting around 780 jobs, closing a significant number of its retail stores and hiking the prices of some of its equipment in a bid to cut costs and become profitable.In a letter to the employees, Peloton CEO Barry McCarthy said the company is exiting from last-mile logistics by closing its remaining warehouses and shifting delivery work to third-party providers like XPO Logistics, resulting in a portion of the job cuts.
“The shift of our final mile delivery to 3PLs will reduce our per-product delivery costs by up to 50% and will enable us to meet our delivery commitments in the most cost-efficient way possible,” McCarthy said.
Peloton also is cutting several positions in its in-house support team and instead will rely on third parties.
“These expanded partnerships mean we can ensure we have the ability to scale up and down as volume fluctuates.”
McCarthy said the company is rebalancing “e-Commerce and retail mix to drive efficiencies, which means we will reduce our retail presence across North America. This decision will result in a significant and aggressive reduction of Peloton’s retail footprint.”
However, he didn’t specify how many of its 86 retail locations will shutter but said the reduction will begin in 2023.
The CEO also said Peloton is increasing the price of its Bike+ by $500 to $2,495 and Tread by $800 to $3,495.
Under the leadership of McCarthy, who took the reins from Peloton founder John Foley in February, the business has increasingly focused on ways to grow subscription revenue over hardware sales.
In July, Peloton said it would stop in-house production of its bikes and treadmills and is moving its hardware manufacturing to Taiwanese company Rexon Industrial Corp to simplify its operations.
The company also suspended operations at its Tonic Fitness facility, which it acquired in 2019, through the remainder of the year.
When McCarthy became CEO, Peloton announced it was cutting down roughly $800 million in annual costs by slashing 2,800 jobs, or about 20% of corporate positions.
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