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Peloton, once hailed as the future of fitness, is now sucking wind. This is why.

Connected fitness company Peloton, known for its technology-enabled exercise bikes and treadmills, has named another CEO.

On Thursday, the embattled company announced that Peloton CEO Barry McCarthy will step down from his roles as the company’s CEO, president and chairman. He will be succeeded by interim co-CEOs Karen Boone and Chris Bruzzo, both Peloton board members. Peloton also announced it will cut 15% of its staff, or 400 employees, as it tries to cut costs.

The job cuts mark the fifth time Peloton has reduced its workforce since the company peaked in 2021. As the company struggles to regain its strength in the fitness industry and among consumers, questions are being raised about what lies ahead. future to the old network. -Fashion fitness fashion.

“As tough as the decision was to make additional workforce cuts, Peloton simply had no other way to align its expenses with its revenues,” McCarthy said in a statement announcing his departure Thursday. He added that the move was necessary as the company prioritizes “the necessary task of successfully refinancing its debt.”

Headquartered in New York, Peloton was one of the companies that were well positioned during the COVID-19 pandemic, benefiting greatly from lockdown policies that kept Americans isolated in their homes. At its peak, it was valued at $50 billion and had long waiting lists for its team.

With the fate of crowded gyms and fitness studios uncertain at best, it seemed during the pandemic that the future of fitness would be home equipment.

Peloton’s sales increased and the company was unable to meet customer demand. That was until 2021, when restrictions were eased and gyms and fitness centers reopened. Peloton, which had funneled money into meeting the unprecedented mountain of consumer demand, appeared to have been caught off guard.

Still recovering from COVID

Eric Koester, an associate professor at Georgetown University’s McDonough School of Business, described Peloton as a “company that’s still trying to find itself post-COVID,” adding that its eventual new CEO will likely take one of two directions.

“A company that reached those heights and came back down to earth now has to decide how to pivot,” Koester told CBS MoneyWatch.

That could mean focusing on developing new home fitness products and attacking the traditional gym industry, or focusing on embracing its existing customer base and capitalizing on their devotion to the brand.

“The company has a rabid following, and maybe the company crossed the chasm into the mass market too hard and not everyone believed,” Koester said.

On Thursday, interim co-CEO Bruzzo blamed the sales decline on consumers continuing to adapt to post-pandemic life. “We’re still dealing with the whiplash, the normalization that happened after COVID,” he said on a call with investors.

Faced with cash flow issues, numerous recalls of defective products, and a shrinking subscriber base, Pelaton appears to have failed to capitalize on the unsolicited boost provided by the unprecedented event of a global pandemic. How is it that a company that was recently very popular with consumers and investors is now faltering?

The demand of a lifetime

One argument is that while the pandemic caused demand for Peloton’s sophisticated fitness machines to skyrocket, the sudden explosion of consumer interest actually hurt the company.

“Some people think the pandemic was the best thing that happened to Peloton, but I think it was the worst,” BMO Capital Markets analyst Simeon Siegel told CBS MoneyWatch.

This is because what was a sort of luxury, niche fitness company with limited appeal suddenly entered the zeitgeist and became a symbol of the lockdown phase.

“It was a really cool idea with a lot of followers and a big community, that was pushed onto the big stage and basically fueled a lifetime of demand,” Siegel said.

In Siegel’s view, the company mistook fleeting pandemic-era demand for transformative growth that would last.

“What happened was the pandemic created the perfect environment for people to want to buy a Peloton,” Siegel said. To be sure, some consumers who were drawn to Peloton during the pandemic may have abandoned fitness altogether.

rock star moment

If the pandemic had never happened, Peloton might not be as well-known as it is today, but it would likely be a company “with a fairly steady growth rate and an incredibly loyal fan base that pays a profitable monthly fee,” Siegel said. “It would be a smaller, healthier business that never reached that rock star moment.”

Laurent Vasilescu, managing editor and senior equity analyst at BNB Paribas, said the company has had plenty of time to reposition itself after the pandemic, but did not do so under McCarthy’s leadership.

“I think he tried to do too many things too quickly and didn’t really focus just on the core business. I don’t have an answer for them; I don’t know where they go from here,” Vasilescu said. “But I think it will become a smaller company to the point that one day you won’t care.”