Peloton Increases Prices of Bike+ and Tread, Announces Job Cuts and Store Closures

Peloton, facing a challenging year, is implementing significant changes to regain stability. On the consumer front, the company is reversing price cuts on two of its key fitness equipment products. The Bike+ will see its price increase from $1,995 to $2,495 in the US, while the Tread will be priced at $3,495, an increase of $800 from its previous reduced price. These price adjustments aim to restore the brand’s historical positioning, as the initial price cuts had negatively impacted the brand’s perception, according to CEO Barry McCarthy.

Additionally, Peloton is undertaking another round of job cuts, eliminating 784 positions in its distribution and customer service teams. The company plans to close 16 warehouses in North America and transition to using third-party companies for deliveries and equipment setup, resulting in the loss of 532 jobs. Peloton will also reduce its in-house customer support team by half, cutting approximately 252 positions. These layoffs follow the previous reduction of around 570 employees in Taiwan as Peloton shifts away from in-house manufacturing.

Moreover, Peloton intends to close its retail showrooms starting next year, although the exact number of closures remains unknown. Currently operating 86 showrooms in the US and Canada, the company aims to return office-based employees to its offices in November.

According to McCarthy, these changes are necessary to achieve positive cash flow and revenue growth. Peloton reported a significant loss of $757.1 million in the first quarter of 2022 due to declining revenue and rising operating costs. The company experienced a surge in business during the initial phase of the COVID-19 pandemic but miscalculated demand, leading to excess inventory. The upcoming earnings results for the April-June quarter, to be released on August 25th, will provide further insights into the company’s current status.