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Peloton to lay off almost 3,000 workers and replace CEO

ARI SHAPIRO, HOST:

That breakout brand of American pandemic life, Peloton, has hit the skids. The maker of expensive stationary bikes is replacing its CEO and laying off almost 3,000 employees. NPR's Alina Selyukh reports on Peloton's bumpy road.

ALINA SELYUKH, BYLINE: Remember Christmas 2019? This ad seemed to be everywhere.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED ACTOR: (As character) First ride. I'm a little nervous but excited. Let's do this.

SELYUKH: And roughly 3 million people did, once the pandemic hit. When gyms closed and people cooped up at home, Peloton stationary bikes offered a workout with a sense of human connection, starting at almost $2,000 per bike and another $40 a month for video-streamed classes. Dan Ives is a managing director at Wedbush Securities.

DAN IVES: It's an example of a meteoric company that hit a growth brick wall.

SELYUKH: In the first pandemic year, Peloton doubled its workforce and turned its first profit. But that sudden surge in demand created new problems. Peloton dealt with huge factory and shipping disruptions. People waited for weeks for their luxury workout gear. The company invested more in air freight, warehousing, lots of new bikes. It miscalculated. With vaccines, people rushed outdoors and back into gyms. Pelotons gather dust.

IVES: Now they have major demand issues coming out of the pandemic and got over their skis.

SELYUKH: Through it all, co-founder John Foley remained CEO. The former Barnes & Noble executive sold the first Peloton on Kickstarter in 2013. He led the company through ups and downs, including a messy treadmill recall following injuries and a death of a child. But now Foley will step down to be executive chairman.

IVES: Foley is the architect and core DNA of Peloton. Him going stage left shows that it is going to be a Herculean-like challenge to turn Peloton around.

SELYUKH: New CEO Barry McCarthy is a subscription guy, formerly of Spotify and Netflix. Peloton says its celebrity trainers won't change, but 2,800 corporate workers are getting laid off. That's 20% of the workforce. The company also canceled plans for a new factory in Ohio. An activist investor is urging Peloton to sell, maybe to Amazon, to Nike or to Apple. It's not clear the company wants to sell. Ives says this is Peloton's all-important fork in the road. Which turn will it take? Alina Selyukh, NPR News. Transcript provided by NPR, Copyright NPR.