Peloton Boosts its Employees' Pay as Part of Turnaround Strategy
Peloton sweetened incentives for its workers with one-time cash bonuses and changes to its stock compensation plan as it works to retain employees and fix its struggling business, according to internal memos seen by CNBC. The changes come a little more than five months into CEO Barry McCarthy's turnaround plan. McCarthy was named CEO in early February, replacing founder John Foley, as Peloton's expenses spiraled out of control and demand for its bikes waned from a pandemic peak. At that time of the leadership transition, Peloton announced it was slashing roughly $800 million in annual costs. That included cutting 2,800 jobs, or about 20 percent of corporate positions.
Total Retail's Take: Earning the loyalty of its employees is a critical piece to Peloton's turnaround plan. The brand is expecting that a better compensated and more invested workforce will buy into the turnaround strategy, while also fortifying the business at a time when so many retailers and brands are struggling to fill open positions. Peloton saw demand for its at-home fitness product soar at the outset of the pandemic as gyms were closed and people were quarantining in their homes. However, with that surge in demand came a sharp increase in costs for the business, and as demand waned as the pandemic subsided, Peloton found itself in an unenviable financial position. Keeping its employees happy and on board will be important as Peloton looks to convert first-time users acquired during the outset of the pandemic into loyal brand advocates.