The home-exercise firm will replace co-founder John Foley as CEO
The American exercise technology brand, Peloton, has removed co-founder John Foley as CEO and will instigate an overhaul of its board following a disastrous year for the New York-based firm.
Foley stepped down as CEO on Tuesday morning, following calls for him to be fired.
Barry McCarthy, the former chief financial officer of Spotify and Netflix, will head up the operation while Foley, who had been heavily criticized by activist investors, will move to become the executive chair.
Last month, Blackwells Capital, which owns around 5% of Peloton, urged the company’s board to oust Foley and put the company up for sale.
The investment firm accused the CEO of “repeated failures,” listing 10 examples including his pricing strategy – cutting bike prices in August before raising them months later – and hiring his wife as a key executive.
“We believe that no board exercising reasonable judgment could leave Mr. Foley in charge of Peloton,” Blackwells Chief Investment Officer Jason Aintabi wrote in an open letter.
Radical changes at the heart of the business include cost-cutting measures which will help the firm cope with dwindling demand for its exercise bikes and treadmills, according to the Wall Street Journal report.
Roughly 2,800 jobs will be cut by the firm, affecting 20% of its corporate position. It is understood that changes won’t affect fitness instructors or impact the range of content and classes available to customers.
The company experienced a bumper year in 2020, with lockdowns forcing people to remain at home and gyms closing for prolonged periods of time. However, as Covid-19 vaccinations kicked off in 2021 and gyms reopened, Peloton’s sales suffered.
Things got worse at the end of 2021, as Mr. Big, a character from HBO’s ‘Sex and the City’ and its sequel series ‘And Just Like That’ died following a Peloton workout. The episode sent shares plunging.
Peloton quickly responded with an advert featuring Mr. Big actor, Chris Noth, in which the character appears alive and well. It is inferred that he had faked his own death to run off with a mistress.
It was reported on Friday that Peloton was the subject of takeover interest from Amazon and Nike.
The company’s share price slumped 83% last year, down from a peak at $50 billion.