The co-founder of Peloton is stepping down as chief executive after an extended streak of tumult at the exercise and treadmill company, which will also cut almost 3,000 jobs.
John Foley first pitched the idea of an interactive exercise bike in 2011, hoping to disrupt the industry. He will give up the CEO position and become executive chair at Peloton Interactive Inc.
Barry McCarthy, who served as CFO at Spotify as well as at Netflix, will take over as CEO, the company said Tuesday.
Peloton has been on a wild ride for the past two years during the pandemic. Company shares surged more than 400 per cent in 2020 amid COVID-19 lockdowns that included gyms. Nearly all of those gains were wiped out last year as the distribution of vaccines sent many people out of their homes and back into gyms.
This week, there were reports that Amazon or Nike might buy the company and those that have pushed for the sale of Peloton continued to do so this week.
Big investors pushed for change
Activist investor Blackwells Capital asked again for the company to be sold Tuesday despite the change in leadership.
Blackwells sent a presentation to Peloton on Monday outlining “the mismanagement of the company by John Foley, the poor governance and board composition and the rationale for immediately commencing a sale process.”
In addition to the leadership shakeup, Peloton announced Tuesday that it was cutting 2,800 jobs, including approximately 20 per cent of corporate jobs at the New York City company. The instructors who lead interactive classes for Peloton will not be included in cuts, nor will the content that the company relies on to lure users.
Peloton said its winding down the development of its Peloton Output Park in Ohio. It will also reduce its owned and operated warehousing and delivery locations and will instead ramp up its third-party relationships.
Peloton is looking to reduce its planned capital expenditures for this year by about $150 million. The restructuring program is expected to result in approximately $130 million in cash charges related to severance and other exit and restructuring activities and $80 million in non-cash charges. The majority of the charges will be recorded in fiscal 2022.
In a conference call with analysts, Foley acknowledged that mistakes had been made and that the company invested too quickly.
“We own it. I own it and we are holding ourselves accountable,” Foley said. “That starts today.”
The company anticipates at least $800 million in annual cost savings once its actions are fully implemented.
Wall Street took the shakeup Tuesday as a pivotal moment for Peloton, including the odds of a sale.
“We believe Foley leaving makes it more likely that Peloton ultimately sells the company and the board clearly has major decisions to make in the days/weeks/months ahead,” wrote Wedbush analysts Daniel Ives and John Katsingris.
But a sale is not assured.
“I think the moves, as a whole, do not signify that Peloton is throwing in the towel. I believe this means they are going to slim down, refocus, and stay independent. Investment from outside firms should be on their agenda but not a sale,” Raj Shah, North America lead for tech, media, and telecom at digital consulting firm Publicis Sapient, said.
That uncertainty sent shares of Peloton tumbling 7 per cent seconds after the leadership change was announced, with many believing the odds of a sale had diminished.
By the opening bell, however, the company’s shares were rising, with many pointing to the new CEOs background in finance and the potential for a deal.
“Promoting Barry McCarthy with his eye on the financials makes sense — he’s the type who can objectively look at Peleton’s operations and choose where to invest and where to cut,” said Timothy Hubbard, assistant professor of management at the University of Notre Dame’s Mendoza College of Business in Indiana.
TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.
The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.
Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.
Consolidated comparable sales were up 0.3 per cent.
On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.
The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.
The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.
Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.
Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.
On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.
The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
TORONTO – Thomson Reuters reported its third-quarter profit fell compared with a year ago as its revenue rose eight per cent.
The company, which keeps its books in U.S. dollars, says it earned US$301 million or 67 cents US per diluted share for the quarter ended Sept. 30. The result compared with a profit of US$367 million or 80 cents US per diluted share in the same quarter a year earlier.
Revenue for the quarter totalled US$1.72 billion, up from US$1.59 billion a year earlier.
In its outlook, Thomson Reuters says it now expects organic revenue growth of 7.0 per cent for its full year, up from earlier expectations for growth of 6.5 per cent.
On an adjusted basis, Thomson Reuters says it earned 80 cents US per share in its latest quarter, down from an adjusted profit of 82 cents US per share in the same quarter last year.
The average analyst estimate had been for a profit of 76 cents US per share, according to LSEG Data & Analytics.
This report by The Canadian Press was first published Nov. 5, 2024.
