It's been a brutal year for Peloton and the company is enacting more major changes in a bid to get back on track. On the consumer front, Peloton is reversing price cuts to two of its core pieces of fitness equipment. The Bike+ is going back up from $1,995 to $2,495 in the US.
The Tread, meanwhile, will be more expensive than before Peloton reduced prices in April to focus on subscription revenues. The Tread will go up by $800 in the US to $3,495. At the start of this year, the machine cost $2,895. The company is also increasing the prices of the products in Canada, the UK, Germany and Australia.
Lowering the prices in the first place “cheapened at least the perception of the brand,” CEO Barry McCarthy told Bloomberg. “So this is a return to historical positioning.” He added that, "I probably wouldn’t have messed with the prices at all if I had been confronted with different inventory states back when we lowered the pricing.” The company isn't changing the price of the original Bike or the Peloton Guide system for now.
Meanwhile, in its third publicly disclosed round of layoffs this year, Peloton is cutting another 784 jobs across its distribution and customer service teams. It will close 16 warehouses in North America and solely use third-party companies for deliveries and setting up equipment in people's homes. Shutting down in-house distribution and closing warehouses will lead to the loss of 532 jobs.
The company will also use third-parties to augment its customer support team, which will be slashed roughly in half with the loss of 252 positions. Those job cuts are on top of around 570 employees Peloton laid off in Taiwan last month as it transitions away from in-house manufacturing. In February, Peloton culled around 2,800 jobs and brought in McCarthy as the new CEO. However, the company still plans to hire in certain areas, such as software development.
On top of all of that, Peloton plans to start closing its retail showrooms next year. It remains to be seen how many will be closed, though it operates 86 in the US and Canada. The company will require office-based workers to return to its offices as of November.
McCarthy told employees in a memo (which was provided to Bloomberg) that changes were necessary to help make the company cash-flow positive once more. “We have to make our revenues stop shrinking and start growing again,” he wrote. “Cash is oxygen. Oxygen is life.”
Peloton posted a huge loss of $757.1 million for the first three months of 2022 due to a decline in revenue and soaring operating costs. It saw a major boom in business soon after the onset of the COVID-19 pandemic. However, it believed that demand would continue after the planet opened back up and it built too many units of its fitness gear before slowing down production earlier this year.
We'll soon have a clearer picture of the current state of the business. Peloton will post its earnings results for the April-June quarter (Q4 of its fiscal year) on August 25th.