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Peloton announces layoffs, price increases and store closures as the company faces ongoing challenges in the home workout market

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tom friend

August 12, 2022

Peloton is laying off nearly 780 employees as part of an overhaul that will primarily impact the company’s delivery staff.

In an internal employee memo sent out Friday, CEO Barry McCarthy wrote that starting in 2023, the company will also close a significant portion of its 86 retail stores and immediately increase the prices of its home fitness products to ensure better profitability. After lowering prices earlier this year, Peloton’s Bike+ will increase by $500 to $2,495 and Peloton’s Tread will increase by $800 to $3,495. The prices of Bike v1 and the AI-enabled strength training Peloton Leader will remain the same.

By closing its remaining warehouses, Peloton is shifting its “last mile delivery” to third-party suppliers, leading to the current layoffs. McCarthy estimates that this alone will reduce “shipping costs per product by up to 50%.”

This decision marks a significant reversal from 15 months ago, when Peloton, under founder and former CEO John Foley, announced it would spend $400 million on construction first production site in the US Construction of the 200-acre complex was scheduled to begin in 2023 and would produce Peloton’s bicycles and treadmills, as well as contain office space and a fitness center for employees. At the time, Peloton expected to create over 2,000 jobs in northern Ohio and leverage renewable energy sources to power the factory. Those plans undoubtedly changed under McCarthy.

Peloton is recognized as a leader in connected fitness and recently branched into it Wearable Technology. Starting late this March Peloton’s Losses had risen to $757.1 million compared to $8.6 million a year earlier, while revenue fell to $964.3 million from $1.26 billion. Tonal, an AI-powered home strength-training machine and competitor to Peloton, has shed 35% of its workforce over the past month.

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