Peloton announce departure of Chief Executive John Foley as company sheds 2,800 jobs

A significant reversal of fortune for exercise-at-home brand Peloton has seen the company announce the departure of Chief Executive John Foley, 2,800 redundancies and a reigning in of its expansion plans.

Having experienced a surge in its share price at the start of the COVID-19 pandemic - the company’s share rose by 400% in 2020 - Peloton has been seen as misjudging the longevity of the trend for people to exercise in their home as pandemic restrictions eased, people got vaccinated and members returned to gyms.

Earlier this year it was also negatively impacted when a major character in the And Just Like That television series (the successor to Sex and the City) collapsed and died after exercising on his Peloton bike.

Amid speculation that the company will be sold, 2,800 jobs will be cut while Foley, who first pitched the idea for Peloton in 2011, will give up the Chief Executive position and become Executive Chair at Peloton Interactive.

In yesterday’s announcement, Peloton revealed that Barry McCarthy, who has served as Chief Financial Officer of Spotify and Netflix, will take over as Chief Executive.

Company shares surged in 2020 amid COVID-19 lockdowns that made its bikes and treadmills popular among customers who pay a fee to participate in Peloton's interactive workouts.

However, nearly all of those gains were wiped out last year as the distribution of vaccines sent many people out of their homes and back into gyms.

Peloton's initial success also created competition, with companies peeling away customers by selling cheaper bicycles and exercise equipment.

Premium fitness facilities also entered the market, offering virtual classes that once were Peloton's biggest draws.

In a note published on Tuesday, Neil Saunders, Managing Director of GlobalData Retail, advised "the problem for Peloton isn't that it has a bad product. Nor is it that there is no demand for what it sells.

"The central problem is one of hubris and bad judgement.

"Peloton incorrectly assumed that the demand created by the pandemic would continue to curve upward."

In a conference call with analysts on Tuesday, Foley acknowledged the company expanded its operations too quickly and overinvested in certain areas of the business, noting “we are holding ourselves accountable.”

In May, it halted production of its Tread+ treadmills, after recalling about 125,000 of them less than a month after denying they were dangerous.

One was linked to the death of a child, while others were linked to 29 injuries.

Last August, the company cut the price of its main stationary bike - the product that was the cornerstone of its original popularity - by $400 because of slower revenue growth.

Images: Peloton's John Foley (top) and its exercise-at-home technology (below).