A Difficult, But Critical Pivot to Growth
This will be a difficult day for approximately 500 global team members whose positions are being eliminated. I want to start by acknowledging them and thanking them for their many contributions to our company.
We are eliminating these positions and reducing other operating expenses, in order to reach break even cash flow by year-end FY23. Our goal is to control our own destiny and assure the future viability of the business.
I am acutely aware many of those impacted by these changes aren’t just colleagues but are also close friends. 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.
With today’s announcement, the bulk of our restructuring work is complete.
The final building block, which I have previously outlined, is the right-sizing of our retail footprint. We lost more than $100M on retail last year which is why we must restructure this segment of the business. Our commitment is to provide updates on which retail operations will be impacted by this decision in the coming months as our analysis and negotiations with landlords progress.
While today’s news is difficult to hear, let’s remind ourselves of the significant and purposeful changes we have made since the beginning of the year.
Together, we have:
● implemented a restructuring plan to variablize our cost structure and generate significant annual cost savings,
● secured $750 million in financing as well as maintained a liquid cash balance of more than one billion dollars,
● simplified our operations by exiting owned-manufacturing in Taiwan,
● shifted our last mile delivery by expanding relationships with our third party partners,
● affirmed our pricing and premium brand positioning,
● entered into new partnerships with iconic retailers Amazon and Dick’s Sporting Goods, and
● introduced the Peloton Row, forever changing the rowing category.
Together, we have dramatically restructured Peloton’s business. You should be incredibly proud of what we have accomplished. This has not been easy. And, I want to reiterate how grateful I am to each of you for your hard work, contributions, and commitment to this company, our mission, and our Members.
In closing, I want to offer my deepest gratitude to those who are directly impacted by today’s actions. Twice in my career I’ve found myself in a similar situation. The first time was brutally hard. The second time I’d learned from the first. Resilience is a conscious choice. Sooner or later, we all get knocked down in life. But we all deal with setbacks in our own way. However you deal with it, don’t ever lose faith in yourself, and don’t ever stop getting up off the ground when you get knocked down.
I know we can make Peloton a great comeback story if we continue to fight for it. As I have said, this is not easy, but I’ve never been more confident in Peloton and where we are going.
Me to you. You to me. You to each other. And all of us to our Members.