On Friday, Peloton Interactives Inc. PTON told its employees the company will be slashing roughly 780 jobs and will be closing a significant number of its retail stores.
It was also announced that there will be price hikes on some products in order to drive the business forward.
The Reorganization Details: While the fitness company did not specify how many of its 86 retail locations it plans to close, it did share that an “aggressive” reduction will begin in 2023.
Peloton said it will exit last-mile logistics by closing its warehouses and will shift delivery to third-parties, which is leading to a portion of the job cuts. The company said it will also cut a number of positions in its in-house support team, which is mainly located in Tempe, Arizona and Plano, Texas.
The Context: The changes to the company are part of recently installed CEO Barry McCarthy’s plan to move the fitness company in a new direction.
Peloton’s demand skyrocketed during the height of the pandemic, but once people started to go out again, demand decreased almost as fast.
Due to demand decreases, McCarthy is now tasked with getting rid of fixed costs and finding more ways to garner cash from previous customers.
In a memo to employees, McCarthy said: “The shift of our final mile delivery to 3PLs will reduce our per-product delivery costs by up to 50% and will enable us to meet our delivery commitments in the most cost-efficient way possible…These expanded partnerships mean we can ensure we have the ability to scale up and down as volume fluctuates.”
Price Hikes: Earlier this year, Peloton had lowered its prices in hopes of selling existing inventory quickly. Yet the company is now increasing prices in order to boost profits.
The price of its “Bike+” will be increased by $500 to $2,495 and its “Tread” will increase by $800 to $3,495 in the US.
The price of Peloton’s original bike and strength-training product known as “Guide” will remain unchanged.
PTON Price Action: Peloton shares rose 13.6% to $13.53 during Friday’s trading session, according to Benzinga Pro.
Photo courtesy of Peloton.
Image and article originally from www.benzinga.com. Read the original article here.