PJohn Foley, Executive Chairman of eloton Interactive Inc. and co-founder of the company is stepping down as part of a leadership change-up. This will add to the turmoil at a business that’s trying to get out of a slump.
Foley was instrumental in the creation of Peloton and was its chief executive officer for ten years. The company released a statement saying that Foley will be resigning on Monday. Foley assumed the role of executive chairman in February, when he gave the keys to Barry McCarthy (a former CEO at Spotify Technology SA or Netflix Inc).
Hisao Kushi is the Chief Legal Officer, another co-founder. He’ll be replaced in that role by Tammy Albarran, who Peloton recruited from Uber Technologies Inc. Karen Boone, an ex-executive from Restoration Hardware, will fill the chairperson role. She currently acts as independent director.
Initial investors in Peloton praised the changes and sent the stock up to 5.3% at $11.64 during extended trading Monday. However, the stock quickly plummeted and fell by more than 2%.
Peloton is undergoing a year-long upheaval. Although it was successful in the first days of the pandemic and continues to suffer from falling sales, declining profits, and mounting losses, the reshuffle will extend that year. The company’s stock is down by 90% in the last year and it has been struggling to manage a large inventory.
McCarthy, as part of his turnaround plan has eliminated thousands of employees and transferred operations to third parties. But Peloton’s quarterly report in August signaled that his comeback effort has a long way to go.
McCarthy’s goal is to make Peloton cash-flow positive in the second half of the coming fiscal year. “We continue to make steady progress, but we still have work to do,” he said last month, while acknowledging that the company’s financial performance may cause some to doubt the “viability of the business.”
With Peloton’s longtime CEO now out of the picture, McCarthy may have a freer hand to make changes. McCarthy stated that the company must prioritize digital offerings over physical equipment and suggested that subscribers could beam content directly from their phones to other fitness devices.
Separately, Chief Commercial Officer Kevin Cornils is also leaving Peloton and won’t be replaced. Some of Cornils’s responsibilities will be assumed by Dion Sanders as he takes the role of chief emerging business officer, according to an internal memo from McCarthy reviewed by Bloomberg. Jen Cotter, chief content officer will be in charge of apparel and accessories. This shows that the company still believes that it can compete on that market.
Albarran will take over Peloton’s legal operations on Oct. 3. Her role was to manage a company makeover for Uber in 2017. This came after the hard-charging model of Uber led to scandals that resulted in strained relationships with drivers.
Peloton looks to draw on the experience of Albarran and Boone to “help move the company forward into our next chapter of growth,” McCarthy said.
Foley said he plans to build a business “in a new space” after leaving the company. Although he helped make Peloton a well-known fitness brand that has a large following, he was criticised for failing to forecast a decline in exercise bike demand.
Some Peloton investors also had hoped that Foley—and then McCarthy—would consider selling the company. But no suitor emerged, and McCarthy has said that he didn’t take the CEO job to oversee a sale.
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