Peloton is slashing 500 more jobs but denies report that its CEO said it had 6 months to turn itself around

• Peloton is slashing 500 more jobs, or 12% of its workforce, it told the WSJ.
• CEO Barry McCarthy said the company would also reduce its retail footprint.

Peloton is slashing hundreds more jobs in a desperate measure to cut costs.

The connected-fitness giant said it plans to cut around 500 jobs, or roughly 12% of its remaining workforce, per the report. CEO Barry McCarthy told The Wall Street Journal, which first reported on the layoffs, that the cuts are company-wide but that the marketing team would be most affected.

This is the company's fourth round of layoffs this year.

The Journal reported that McCarthy – who has only served as CEO since February – said he was giving the company around six months to turn itself around. A Peloton spokesperson denied to Insider that McCarthy had said this, saying that the publication had taken his comments out of context.

McCarthy told CNBC in a later interview: "The restructuring is done with today's announcement," he said. "Now we're focused on growth. "I'm feeling about as optimistic as I've ever felt," he told the outlet.

With the new layoffs, Peloton will have around 3,800 staff left, The Journal reported. In June 2021, the company had more than 8,600 staff.

Peloton also told The Journal that it has eliminated about 600 more jobs since June than previously disclosed, including through retail store closings.

"I know many of you will feel angry, frustrated, and emotionally drained by today's news, but please know this is a necessary step if we are going to save Peloton, and we are," McCarthy said in a staff memo viewed by Insider. The subject of the memo read: "A Difficult, But Critical Pivot to Growth."

McCarthy told The Journal that the company had reduced costs by slashing jobs, outsourcing all manufacturing, and reducing unsold inventory. He said that the new layoffs would be Peloton's last bit cost-cutting measure and that the focus would from now on be on increasing revenues.

McCarthy said in the memo that the final cost-cutting step would be "the right-sizing of our retail footprint," adding that the segment had lost more than $100 million last year.

"Decisions like this are incredibly difficult and Peloton is doing all we can to help our impacted colleagues," a Peloton spokesperson told Insider. "As we pivot to growth, today marks the completion of the vast majority of our restructuring plan we began in February 2022."

Peloton, which was founded in 2012, became one of the darlings of the pandemic as home-fitness companies boomed during waves of lockdown, despite the huge demand leading to long delivery times and the company having to recall pedals on around 27,000 bikes after some users were injured.

But Peloton's woes really started in March 2021, when a child died in an accident with one of its treadmills. After clashing with regulators, the company recalled all treadmills that May and stopped their sale and distribution.

After the string of real-life incidents, characters in both the "Sex and the City" reboot and "Billions" died while using or after using Peloton bikes.

And the reopening of the economy, which allowed people to return to gyms and group sports, made Peloton's sales dive even further.

In February, the company announced huge cost-cutting measures, including cutting 2,800 jobs, or about 20% of its workforce, and scrapping plans to build its own factory. CEO and cofounder John Foley also announced he would step down, leading to McCarthy being appointed as its new CEO.

The company announced further rounds of layoffs in July and August, totaling around 1,400 workers. As well as Foley, three other execs have left the company, all within a month.

Revenues from hardware sales fell 55% between March and June compared with the same period in 2021, and the company is now heavily reliant on subscription fees, which make up more than half its revenue. The company reported a $1.2 billion operating loss for the quarter.

Peloton has announced some major developments recently, which could help drive sales. In September, the company unveiled its much-anticipated rower, which retails at $3,195. It's also bringing its bikes to all the 5,400 Hilton-branded hotels in the US and will start selling its bikes and treadmills in more than 100 Dick's Sporting Goods stores as well as on its website.

October 6, 2022: This story has been updated to reflect that Peloton is disputing The Wall Street Journal's characterization of its CEO's comments.