Pelton CEO will step down after the group posted a $266.5 million second quarter loss and unveiled a major cost-cutting overhaul many see as a move to make the fitness equipment maker more attractive for a takeover.
Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report shares slumped lower Tuesday after the group said CEO John Foley would step down amid what it called a ‘major’ restructuring that includes 2,800 job cuts and published its formal December quarter earnings.
Peloton said Foley, 50, will transition to the connected fitness equipment maker’s board to make room for Barry McCarthy, a former Spotify (SPOT) – Get Spotify Technology SA Report and Netflix (NFLX) – Get Netflix, Inc. Report CFO, a move many see as preparing the group for an outright sale. Two new members will also join the Peloton board — Angel Mendez and Jonathan Mildenhall — while longtime director Erik Blachford will step down.
Peloton also said it lost $1.39 per share over the second quarter, or $266.5 million, firmly inside prior guidance of a loss of $350 million, on sales of $1.13 billion.
Looking into the current quarter, Peloton said it sees revenues in the region of $950 million to $1 billion, and negative adjusted earnings of between -$125 million and -$140 million.
“Since founding Peloton a decade ago, we’ve grown this brand to engage and motivate a loyal community of more than 6.6 million Members,” Foley said in a statement. “I’m incredibly proud to have worked with such talented teammates over the years who have helped me build Peloton into what it is today, and I’m confident that Barry is the right leader to take the company into its next phase of growth.”
“He’s not only recognized as an expert in running subscription business models and helping category-leading digital streaming companies flourish, but he has also had tremendous success in partnering with founder CEOs at other brands,” he added. “I’m excited to learn from him and work alongside him as Executive Chair.”
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Peloton shares were marked 7.4% lower in pre-market trading immediately following the confirmation of Foley’s departure and its December quarter earnings to indicate an opening bell price of $27.50 each.
The Journal first reported that the group is also planning to eliminate 2,800 jobs, or nearly a fifth of its overall staff, as activist investors at Blackwells Capital LLC continue to press for changes and prompt the group into a takeover following last month’s multi-billion dollar sell-off and a disappointing set of pre-released fourth quarter earnings.
Blackwells called for the firing Foley, and the potential sale of the company, in the wake of last week’s multi-billion sell-off following reports of production halts and cratering customer demand.
