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Peloton cuts 500 jobs, has 6 months to prove it might grow, CEO says

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Peloton is cutting one other 500 jobs in a move that CEO Barry McCarthy said should position the struggling fitness equipment maker to return to growth.

The cuts, which amount to about 12% of Peloton’s workforce, mark a pivot point for the corporate, McCarthy told CNBC on Thursday. Peloton already has had multiple rounds of layoffs this 12 months.

“The restructuring is finished with today’s announcement,” he said. “Now we’re focused on growth.”

McCarthy said the corporate now has to prove its recent spate of strategy changes, including equipment rentals and partnerships with Amazon and Hilton, might help it grow.

Shares of Peloton were up 4% in morning trading. The stock is down about 76% to this point this 12 months.

A person walks in front of a Peloton store in Manhattan on May 05, 2021 in Latest York.

John Smith | Corbis News | Getty Images

McCarthy took over as CEO of Peloton earlier this 12 months from co-founder John Foley, and has overseen drastic changes to its business model as the corporate struggled after a sales boom earlier within the Covid pandemic. A former Spotify and Netflix executive, he has pushed the corporate’s business further into subscriptions while broadening the provision of its products beyond Peloton’s direct-to-consumer roots.

Earlier this week, the corporate said it will put its bikes in every Hilton-branded hotel in america. It recently announced partnerships to sell equipment in Dick’s Sporting Goods stores and on Amazon.

McCarthy talked to CNBC after The Wall Street Journal reported on remarks he made about where the corporate could stand in six months.

“We’d like to grow to get the business to a sustainable level,” McCarthy told the Journal, which first reported on the layoffs.

But even beyond that time, McCarthy told CNBC that Peloton, which has slowed the speed of its money burn, would still be “extremely well capitalized” and “highly liquid.” And it’s still on the right track to satisfy its money flow goals for the fiscal 12 months.

“I’m feeling about as optimistic as I’ve ever felt,” he said, reflecting on the changes the corporate remodeled the past several months.

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