Peloton Cutting Jobs, Shutting Stores, And Raising Prices

Peloton is slashing jobs again, and this time it's also hiking prices on some of its products. It's part of a major cost-cutting strategy as the beleaguered fitness company continues to make changes under its new CEO Barry McCarthy, Jordan Valinsky reported for CNN Business.

Photo Insert: The company has already been forced to borrow $750 million in five-year debt from Wall Street earlier in the year to keep its operations running.

Peloton is laying off nearly 800 employees, McCarthy said in a staff memo that was first reported by Bloomberg. It's part of an effort to "become more efficient, cost-effective, and agile," Peloton said in a statement to CNN Business.

The company will also hike prices by $500 for its Bike+ — bringing it back to $2,495, where it was before a price cut in April. And Peloton's Tread treadmill is increasing by $800, making its new price $3,495.

"We have to make our revenues stop shrinking and start growing again," McCarthy wrote. "Cash is oxygen. Oxygen is life." Other changes include "significantly reduc[ing]" 86 retail stores in North America, as well as outsourcing delivery — which is currently done by Peloton employees — and customer service to third parties.

As people return to gyms, Peloton has been struggling to maintain its electric growth from the early days of the pandemic. Bike and subscription sales have stagnated. The company has too much inventory, and demand is on the decline.

McCarthy, a former tech executive, joined the company in February and has been tasked with a challenging turnaround. Peloton had said in May that it had just $879 million in cash in the bank at the end of the quarter, which has left it "thinly capitalized," McCarthy noted in his memo.

That forced the company to borrow $750 million in five-year debt from Wall Street to keep its operations running.

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