[Editor's Note: Feb. 10, 2022 - This article has been updated with details on the position Rob Barker is moving into.]
On the day that Peloton announced its second quarter 2022 financials and its reduced financial outlook for full-year 2022, it also announced it is cutting 2,800 jobs and its CEO John Foley will move out of that role into the executive chair role, replaced by a former Spotify and Netflix executive.
In addition, Rob Barker, who had served as vice president/general manager of Peloton Commercial, which includes Precor, has left the company, he announced. Peloton purchased Precor in 2021. On Feb. 9, TRIB3 announced that Barker would be "taking a significant stake" in TRIB3, which is a global fitness franchise business..
Peloton has hired Barry McCarthy to take over as CEO and president of Peloton, starting Feb. 9. He will also join the Peloton board of directors. McCarthy has held senior leadership roles at Spotify and Netflix and is a longtime advisor and board member at public and private technology companies.
William Lynch will transition from president of Peloton to a non-executive director on the board.
Taking over Barker’s role, effective Feb. 9, is Betsy Webb, who had been serving as vice president, Peloton Commercial since August 2021. Prior to that, she had her own consulting firm, Betsy Webb Advisors, where she worked with boards, CEOs and start-up leadership teams to help with growth strategies. She also spent 18 years at Microsoft and has an MBA from Harvard Business School.
The leadership changes come at the same time as rumors have circulated about a sale of Peloton to possible suitors such as Nike, Apple or Amazon. The talk of a sale may have been spurred by activist investor Blackwells Capital LLC, who asked the board to seek a buyer and fire Foley, according to the Wall Street Journal. The changes have not gone far enough for Blackwells Capital, according to a Reuters report that said the investor, which owns a 5 percent stake in Peloton, still wants the company to pursue a sale and accused Foley in a 65-page presentation sent to Peloton of mismanagement of the company.
The company recalled its Tread and Tread+ treadmills in May 2021 after a child died allegedly after being sucked under the treadmill and after reports surfaced of other children and pets being injured on the products. Several lawsuits ensued from parents of injured children as well as some shareholders alleging fraud related to the company’s reporting of the injuries.
In August 2021, Peloton announced that the U.S. Department of Justice and the Department of Homeland Security had subpoenaed the company for documents and information related to its reporting of the death and injuries.
In January, Foley disputed media reports that the company was pausing production on its products, but he did acknowledge the rumors of possible layoffs. On Feb. 8, Peloton confirmed that it will cut 2,800 jobs across almost all business operations globally. Peloton is reducing its owned and operated warehouses and delivery teams and expanding its commercial agreements with third-party logistics providers. Corporate positions will be reduced by 20 percent.
Peloton's instructors are not included in the layoffs, and its content will not be impacted by the initiatives.
The layoffs will occur to help streamline reporting structures, and to help the company realign its business operations, reduce its manufacturing footprint, and enhance its capital and operational efficiency, according to the announcement.
The moves are anticipated to save $800 million in annual costs. Peloton will also reduce its planned capital expenditure spending in 2022 by about $150 million. The restructuring program is expected to result in approximately $130 million in cash charges related to severance as well as other exit and restructuring activities and $80 million in non-cash charges.
Peloton anticipates the changes will improve the economics of its hardware business. The company is winding down the development of its Peloton Output Park manufacturing plan, which will result in $60 million in restructuring capital expenditures.
Peloton had been facing falling stock prices as it dealt with product recalls and lawsuits as well as falling sales since health clubs and studios reopened now that COVID-19 restrictions have lessened.
Barker’s departure was not mentioned in the official Peloton communications, but on Feb. 7, he sent an announcement about his departure to Precor and Peloton employees and shared that message on his LinkedIn page.
His message said, in part: “My next chapter involves a big step as I have decided to leave Peloton. After 27 years in various roles at Precor, Amer Sports and Peloton, I am moving from being a full-time executive at one company to a fitness industry small entrepreneur and advisor.”
“When recruiting Betsy, we searched for a person that would one day take over the leadership of Peloton Commercial, and I am confident in Betsy’s abilities to lead the Commercial business in its next chapter,” Barker shared in a message to Precor and Peloton as well as on his LinkedIn page.
At that time, Barker did not share he would be investing in TRIB3, instead just sharing that he will continue in the fitness business, and is investing in “a growing European-based boutique fitness studio.” He said he will not work with anyone who competes with Precor or Peloton.
Barker and his family will move to Lisbon, Portugal in May.
Barker had been with Precor since 1995, starting as a sales rep in the United Kingdom.
On why he was leaving now, Barker’s message stated: “The last few years at Precor have been a fantastic journey and have been full-on for many of us. I have been honored to have led Precor through the sale of Amer Sports to Anta, the heavy impacts of COVID and the sale of the business to Peloton. So when recently setting our new strategy for the next growth phase, I decided it was an excellent time to step down and for Betsy to take over.”