is replacing its CEO and cutting roughly 20% of its corporate workforce as it hopes to win back investors’ confidence and reset its business for growth coming out of the pandemic.
The announced changes come days after reports circulated that Peloton could soon be a takeover target. Shares surged on hopes of a deal would be struck with a tech giant or athletic apparel behemoth. But news of a management shakeup and strategic overhaul make this path seem much less likely, at least in the near term.
The connected fitness company announced Tuesday that Barry McCarthy, the former chief financial officer ofand , will become CEO and president and join Peloton’s board. McCarthy, 68, currently serves on the board of delivery start-up Instacart.
Founder John Foley will step down from the CEO post, and become executive chairman of the board.
Peloton shares closed Monday up more than 25%, at $37.27, bringing the company’s market cap back up to about $12.2 billion.
“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,” said Foley, inannouncing the leadership changes. “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.”
Foley pointed to McCarthy’s previous experience managing subscription business models and digital streaming companies. He’s also been a consultant for Peloton investor Technology Crossover Ventures.
. It said it will reduce its delivery teams and the amount of warehouse space it owns and operates.
“The decisions we have made will make us a leaner and more nimble organization that is better able to execute against our sizable growth opportunity,” said Foley, in a separate letter to shareholders.
Peloton is expecting to cut 2,800 jobs, or about 20% of its corporate positions. The cuts won’t affect its instructor roster or content. But Foley did announce that his wife, Jill Foley, is leaving her role as vice president of Peloton’s apparel business. CNBC reported last month.
Peloton employed 6,743 people in the United States as of June 30, more than double the roughly 3,281 employees it counted a year earlier, according to annual filings.
Roughly a week ago, activist Blackwells Capital — which has a less than 5% stake in the company — sent a letter to Peloton’s board, and asking the company to consider selling itself.
Reports have since circulated that potential suitors could includeor . However, as of Sept. 30, which would make it practically impossible for any deal to go through without their approval.
Following Tuesday’s news, Blackwells Chief Investment Officer Jason Aintabi said the actions don’t go far enough.
“Peloton CEO John Foley naming himself Executive Chairman and hiring a new CFO does not address any of Peloton investors’ concerns,” Aintabi said in a statement. “Mr. Foley has proven he is not suited to lead Peloton, whether as CEO or Executive Chair, and he should not be hand-picking directors, as he appears to have done today.”
Foley, 51, founded Peloton in 2012. He previously served as the president at Barnes & Noble. Foley also brought on his wife, Jill, to lead up Peloton’s apparel business — a decision Blackwells has also criticized.
As part of the management changes, William Lynch, Peloton’s president, will step down from his executive role but remain a director. Lynch, a former Barnes & Noble CEO, was.