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Peloton’s 2,800 job cuts hit Plano and other offices around the country

The fitness company also abandoned plans for a new manufacturing plant that would have employed 2,000.

Peloton made its widely speculated layoffs official Tuesday, disclosing plans to cut about 2,800 jobs from its corporate workforce, which includes its New York City headquarters and Plano and Atlanta offices.

The struggling fitness company also canceled a new factory under construction in Ohio that was to have employed 2,000 workers. The moves were part of sweeping changes that saw its founder and CEO John Foley step aside and turn over the top job to Barry McCarthy, former chief financial officer of Spotify and Netflix.

Peloton, which saw demand for its interactive exercise bikes spike during the early months of the COVID-19 pandemic, declined to comment further Tuesday on the job cuts. As recently as December 2020, Peloton planned to have about 1,600 people working in Plano.

Peloton's Plano campus at the Legacy Central mixed-use development.
Peloton's Plano campus at the Legacy Central mixed-use development.(Jim Wilson / CBRE)

Plano was Peloton’s first support center outside New York City, providing member support, sales, field operations and other corporate functions. The Plano campus earned recognition as one of The Dallas Morning News’ top 100 places to work in 2021, with workers praising the company’s inclusivity.

“I can be myself and make our members happy at the same time,” said one worker at the time.

In December 2020, the company had added 103,750 square feet of office space in the Legacy Central mixed-use development at U.S. Highway 75 and Legacy Drive. That was on top of the 30,000 square feet of office space it leased in 2018.

Those laid off will receive cash compensation based on job level and tenure with Peloton, an equity vesting period extension, health care coverage extension, career services and a one-year complimentary Peloton membership, according to the company.

Peloton had been a highflier during the pandemic, when lockdowns sent customers scrambling to buy its stationary bikes and attend classes. With restrictions easing — and many fitness junkies returning to regular gyms — the company faced an investor backlash and had to retool its operations.

Some investors had been pushing for a sale of the company.

Tuesday’s shake-up sent Peloton shares on their biggest one-day rally and renewed speculation that the ailing fitness company could be a takeover target.

The stock surged 25% to $37.27, with investors betting that a leaner Peloton might be poised for a sale. The fitness company said Tuesday that it was open to offers, and many tech and media giants have been cited as possible suitors, including Inc. and Nike Inc.

Even after Tuesday’s gain, the stock has lost about three-quarters of its value over the past year.

Activist investor Blackwells Capital LLC had campaigned for Foley’s departure, but the firm said Tuesday that the latest changes didn’t go far enough to address its concerns.

“Foley has proven he is not suited to lead Peloton, whether as CEO or executive chair, and he should not be hand-picking directors, as he appears to have done today,” Blackwells Capital chief investment officer Jason Aintabi said in a statement.

Foley, a former Barnes & Noble Inc. e-commerce executive and cycling enthusiast, founded the company after posting a video to Kickstarter in 2013. The company became an early pandemic darling with long waiting lists for its stationary bikes, but then suffered a series of missteps, including product recalls after reported accidents and a child’s death. The company’s public image also took a hit in December, when HBO Max’s Sex and the City reboot killed off a Peloton-riding character.

At the end of last week, Peloton was valued at just over $8 billion, based on Friday’s closing price of $24.60 a share. That’s below its September 2019 initial public offering price of $29.

Its outlook is cloudy. Peloton lowered forecasts for growth and subscribers, a sign it’s still struggling to predict demand as people gradually head back to the office. Managing Peloton’s supply chain has been a challenge as well.

Peloton cut its expectations for full-year revenue to $3.7 billion to $3.8 billion from a previous forecast for as much as $4.8 billion. It expects to have 3 million connected fitness subscribers in the coming year, down from a previous estimate of as many as 3.45 million. That’s up significantly from the 700,000 subscribers the company had pre-pandemic.

Bloomberg News contributed to this story.

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