(RTTNews) – Peloton plans to cut jobs and reassess the cost structure to compensate for its recent struggles. The company has recently experienced a dramatic decline in its fortunes, coupled with a number of public relations disasters. The company has sought help from a management company, McKinsey & Co., which will lead to store closures, according to reports.
CNBC reported that the company plans to close about 15 of its 123 stores around the world as well as cut jobs in its apparel division. The company is also considering having store employees handle customer calls when they’re “less busy,” the wire reported.
The company has increased the total cost of its fitness equipment because buyers will have to pay $250 for delivery and installation for the bike and $350 for the tread. The company cited inflation as the main reason for the price hike.
Dara Treseder, the company’s director of marketing and communications, said at an earlier meeting: “Right now people are raising prices. Ikea just raised prices. We want to be in the middle of the pack. “
The company saw a rapid 440% increase in 2020 at the start of the pandemic, when gyms were closed and people had to find a way to exercise at home. Since then, the company has seen an equally drastic drop in 2021, dropping 76%. The company’s recent market capitalization has dropped to $10.2 billion. During the previous year, the company managed to increase its revenue by only 6%, compared to 250% the previous year. The past quarter has seen just 161,000 new users join the app, the lowest addition since the pandemic began.
In November, Chief Financial Officer Jill Woodworth said: “Some of these identified areas of savings include significant adjustments to our hiring plans across the company, optimizing marketing spend and limiting development of showrooms.”
During the same presentation, the company also lowered its budget outlook for revenue in 2022 to $4.4 billion and $4.8 billion from $5.4 billion.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.