Yesterday, Peloton announced the resignations of John Foley, co-founder and executive chair, and Hisao Kushi, co-founder and chief legal officer. Foley’s resignation is immediate, while Kushi’s is effective October 3, 2022. Foley co-founded Peloton in 2012 and had served as the company’s CEO for 10 years before becoming executive chair in February 2022. Peloton said Foley is a pioneer who helped pave the way for the connected fitness industry. Kushi has been the company’s chief legal officer since 2015. He has been credited with assisting the company’s growth and scale.
Foley commented on his time at Peloton.
“As I reflect on the journey Peloton has been on since we founded it, I am so proud of what we have built together. From day one, the incredible talent we’ve had on our team and the dedication, hard work, and creativity of every Peloton employee are what got us to where we are today. We founded the company because we wanted to make fitness and wellness convenient, fun, and effective. Because of the work of thousands of people, we’ve done that,” Foley said.
Barry McCarthy took over for Foley as CEO in February when Foley transitioned into the executive chair role. This was part of a larger company restructuring as the company to reverse a $439.4 million loss in the second quarter of fiscal year 2022. At the same time, Peloton laid off 2,800 employees and cut $800 million in annual expenses. McCarthy commented on the resignations.
“I would like to offer my gratitude to John and Hisao for their shared vision, dedication, and passion for Peloton. Through their hard work, they have given the world the connected fitness industry and created a platform that empowers each of us to be the best version of ourselves. We are indebted to them for their countless contributions,” McCarthy said.
Karen Boone named new board chair
Peloton has named Karen Boone as their new board chair, replacing Foley. She joined the board as audit committee chair in 2019 and was named the lead independent director in October 2021.
“We are immensely grateful to John and Hisao for having the vision, ambition, and commitment to turn Peloton into the iconic consumer brand it is today. Not only did they succeed in building a great company, they transformed an entire industry by leveraging fitness and technology. Their impact will resonate long after their departure,” Boone said in yesterday’s announcement.
Fourth quarter fiscal year 2022 results
These changes are a result of Peloton’s financial dismal results for the fourth quarter of fiscal year 2022, reported at the end of August. During the quarter, revenue was $678.7 million, compared to $964.3 million in the previous quarter. They also reported a net loss of $1.2 billion. This loss included $415 million due to the restructuring. These losses came in spite of business model changes earlier this year. In addition to the cost cutting and layoffs, Peloton began offering a bundled subscription to lower barriers to entry. They also lowered equipment prices and raised membership prices.
Peloton did well during the pandemic, when gyms were shut down or were open with limited capacity. Since gyms and fitness studios have opened back up, Peloton has been on a steady downward decline. This last quarter was a rough one, and it makes sense that the company will shake things up with leadership changes. In his August 25 shareholder letter, McCarthy is very positive about the company’s future, and he outlines a host of changes, including product and service changes, staffing changes, and more. He predicts that things will balance out and return to an upward trajectory sometime in fiscal year 2023.