Skip to main content

Peloton gears up to hike prices, lay off 800 employees, and shutter stores

Peloton gears up to hike prices, lay off 800 employees, and shutter stores

/

The Bike Plus and Tread are about to get more expensive

Share this story

An empty Peloton studio with several of its bikes
Peloton’s Bike Plus will return to its original $2,495 pricing from $1,995.
Photo by Amelia Holowaty Krales / The Verge

Peloton CEO Barry McCarthy had his job cut out for him when he took over the helm in February as the company laid off 2,800 employees. Now, roughly six months later, McCarthy has sent out a memo to staffers warning the company plans to eliminate an additional 784 jobs in a third round of layoffs, reports Bloomberg. Peloton will also increase the prices of the Bike Plus and Tread, while shuttering retail showrooms starting in 2023.

Peloton spokesperson Ben Boyd confirmed the news in a statement to The Verge, writing:

“Peloton, today, took several steps to further advance our transformation strategy, better positioning the company for long term success as the largest, global Connected Fitness company. The moves we made include, the implementation of more strategic pricing; the elimination of our North America final mile distribution network and expansion of our third-party logistics (3PL) partnerships; the reduction of our North America Member Support team; and the signal of our intent to significantly reduce our North America retail footprint. Unfortunately, these workforce shifts result in the departure of 784 employees from the company. Any decision we make that impacts team members is not taken lightly, but these moves enable Peloton to become more efficient, cost-effective, and agile as we continue to define and lead the global Connected Fitness category.”

The staffing reductions and plans to shutter retail showrooms are an extension of Peloton’s strict restructuring plans following a disastrous year. Last month, Peloton cut nearly 600 jobs in Taiwan as part of a move to reduce in-house manufacturing. In February, it also announced that it was putting an end to plans for a $400 million factory in Ohio. Meanwhile, McCarthy noted that although the company is cutting jobs on its delivery and customer support teams, it’s actively looking to fill roles on its software engineering team. McCarthy also cited plans to expand Peloton’s e-commerce presence as a reason why the company will reduce its retail footprint starting next year.

Today’s news was foreshadowed during Peloton’s Q3 earnings in May. At the time, McCarthy also floated ideas of exploring third-party retailer partnerships as well as eliminating the need for white-glove delivery for its bikes and treadmills.

Woman running on Peloton Tread
The Peloton Tread was initially supposed to be the company’s more affordable treadmill. It’s now going to be $800 more expensive at $3,495.
Photo by Amelia Holowaty Krales / The Verge

Consumers will be most directly impacted by planned price hikes, however. To address excess inventory, Peloton lowered prices on the original Bike, Bike Plus, and Tread in April to $1,445, $1,995, and $2,695, respectively. Now, the Bike Plus will return to its original price of $2,495, while the Tread’s price will increase by $800 to $3,495. That’s higher than the Tread’s initial launch price of $2,495 (it was later increased to $2,845). The Tread was initially envisioned as the more “affordable” of Peloton’s two treadmills. However, the Tread Plus was then recalled and discontinued after causing several injuries and, in one instance, the death of a young child. The price of the original Bike and the recently launched Peloton Guide, however, will remain unchanged.

McCarthy acknowledged in the memo that the pricing hikes are an abrupt reversal in strategy. That’s because, according to McCarthy, the company has seen success in managing its inventory and supply chain woes. It’s also secured a $750 million bank loan, and the hikes are meant to boost the Bike Plus and Tread’s “premium” image.

The layoffs and price hikes are also part of ongoing efforts to restore Peloton’s cash flow. In a shareholder letter last quarter, McCarthy noted that Peloton’s woes had left it “thinly capitalized” for its needs and that the company needed to strengthen its balance sheet. “These changes are essential if Peloton is ever going to become cash flow positive,” McCarthy wrote in the memo. “Cash is oxygen. Oxygen is life. We simply must become self-sustaining on a cash flow basis.”

Side angle of the Peloton Guide
The Guide will remain the same price.
Photo by Victoria Song / The Verge

According to the memo, the money saved in today’s measures will go toward further research and development as well as marketing. That tracks with plans McCarthy proposed last quarter. At the time, for example, he revealed that Peloton had barely spent any money marketing its standalone app subscription. The company has since rectified that with an ad promoting the standalone app featuring actor Christopher Meloni exercising in the buff. Cheeky (literally) ads aside, McCarthy has been adamant about reframing Peloton as a connected fitness brand, as opposed to “that Bike company.” That’s thus far included proposed plans to tweak the company’s subscription model and build an app store. McCarthy’s also implemented a recent pilot program for leasing the company’s bikes.

McCarthy ended the memo bullish on Peloton’s prospects — though, in his first six months, investors haven’t seemed too convinced by Peloton’s restructuring plans. Peloton’s stock has nosedived roughly 90 percent over the past year. That said, investors seemed responsive to today’s news, with shares rising 8.2 percent. Later this month, Peloton is expected to release its Q4 earnings, which might paint a clearer picture as to how McCarthy’s restructuring strategies have fared.

Today’s Storystream

Feed refreshed 32 minutes ago Dimorphos didn’t even see it coming

J
External Link
Jess Weatherbed32 minutes ago
Won’t anyone think of the billionaires?

Forbes reports that rising inflation and falling stock prices have collectively cost members of the Forbes 400 US rich list $500 billion in 2022 with tech tycoons suffering the biggest losses.

Jeff Bezos (worth $151 billion) lost $50 billion, Google’s Larry Page and Sergey Brin (worth a collective $182b) lost almost $60b, Mark Zuckerberg (worth $57.7b) lost $76.8b, and Twitter co-founder Jack Dorsey (worth $4.5b) lost $10.4b. Former Microsoft CEO Steve Ballmer (worth $83b) lost $13.5b while his ex-boss Bill Gates (worth $106b) lost $28b, albeit $20b of that via charity donations.


T
Thomas Ricker6:45 AM UTC
Check out this delightful DART Easter egg.

Just Google for “NASA DART.” You’re welcome.


M
The Verge
We’re about an hour away from a space crash.

At 7:14PM ET, a NASA spacecraft is going to smash into an asteroid! Coverage of the collision — called the Double Asteroid Redirection Test — is now live.


E
Twitter
Emma RothSep 26
There’s a surprise in the sky tonight.

Jupiter will be about 367 million miles away from Earth this evening. While that may seem like a long way, it’s the closest it’s been to our home planet since 1963.

During this time, Jupiter will be visible to the naked eye (but binoculars can help). You can check where and when you can get a glimpse of the gas giant from this website.


E
Twitter
Emma RothSep 26
Missing classic Mario?

One fan, who goes by the name Metroid Mike 64 on Twitter, just built a full-on 2D Mario game inside Super Mario Maker 2 complete with 40 levels and eight worlds.

Looking at the gameplay shared on Twitter is enough to make me want to break out my SNES, or at least buy Super Mario Maker 2 so I can play this epic retro revamp.


R
External Link
Russell BrandomSep 26
The US might still force TikTok into a data security deal with Oracle.

The New York Times says the White House is still working on TikTok’s Trump-era data security deal, which has been in a weird limbo for nearly two years now. The terms are basically the same: Oracle plays babysitter but the app doesn’t get banned. Maybe it will happen now, though?


R
Youtube
Richard LawlerSep 26
Don’t miss this dive into Guillermo del Toro’s stop-motion Pinocchio flick.

Andrew Webster and Charles Pulliam-Moore covered Netflix’s Tudum reveals (yes, it’s going to keep using that brand name) over the weekend as the streamer showed off things that haven’t been canceled yet.

Beyond The Way of the Househusband season two news and timing information about two The Witcher projects, you should make time for this incredible behind-the-scenes video showing the process of making Pinocchio.


R
External Link
Russell BrandomSep 26
Edward Snowden has been granted Russian citizenship.

The NSA whistleblower has been living in Russia for the 9 years — first as a refugee, then on a series of temporary residency permits. He applied for Russian citizenship in November 2020, but has said he won’t renounce his status as a U.S. citizen.


E
External Link
Emma RothSep 26
Netflix’s gaming bet gets even bigger.

Even though fewer than one percent of Netflix subscribers have tried its mobile games, Netflix just opened up another studio in Finland after acquiring the Helsinki-based Next Games earlier this year.

The former vice president of Zynga Games, Marko Lastikka, will serve as the studio director. His track record includes working on SimCity BuildIt for EA and FarmVille 3.


A
External Link
Vietnam’s EV aspirant is giving big Potemkin village vibes

Idle equipment, absent workers, deserted villages, an empty swimming pool. VinFast is Vietnam’s answer to Tesla, with the goal of making 1 million EVs in the next 5-6 years to sell to customers US, Canada and Europe. With these lofty goals, the company invited a bunch of social media influencers, as well as some auto journalists, on a “a four-day, multicity extravaganza” that seemed more weird than convincing, according to Bloomberg.