“They spent money on things they shouldn’t have.”

John Foley, CEO of Peloton, next to a sunken peloton bike on a red background with down arrows and a graph of PTON stocks

GT. Marian Ayala / from the inside

  • Barry McCarthy became Peloton CEO this month, replacing John Foley amid months of turmoil at the company.

  • In an interview with the New York Times on Saturday, McCarthy explained what went wrong in Peloton.

  • “They spent money on things they shouldn’t have,” he said. “They fell into seeing the thing at the cost of becoming real.”

Barry McCarthy has a lot to do with his role as Peloton’s new CEO.

Peloton, a much-loved pandemic-era cult following, once boasted a valuation of nearly $50 billion. In recent months, however, the fitness company experienced the largest one-day decline in market value, lay off 20% of the company’s workforce, And the Production of the bike and treadmill has reportedly been temporarily halted amid falling demand.

In an interview with the New York Times, DealBook On Saturday, McCarthy broke out exactly what Peloton had missed.

“The cost structure faltered with revenue, and they spent money on things they shouldn’t have,” he told DealBook.

Peloton has pumped hundreds of millions of dollars into its logistics network in recent years to keep pace with demand for its products. Opened new warehouses, Bought a factory in Taiwan in 2019, And the Spent $420 million to acquire fitness equipment maker Precor in the year 2020.

But when demand fell as the company’s pandemic popularity waned, Peloton Fall prey to the whip’s influence, With some employees telling Insider earlier Warehouses are so full of bikes that they are like jigsaw puzzles trying to find space to fit more.

Earlier this month, Peloton announced that Cancel plans to build its own factory $ 400 million In Ohio, it will reduce the number of warehouses and delivery centers in favor of third-party distribution as part of cost-saving measures expected to generate approximately $800 million in savings annually.

In an interview with DealBook, McCarthy also described another area in which he believes Peloton has failed.

“They have fallen into the vision at the cost of getting real and dealing with the world as it is,” he said. “I mean, really, who thought Covid was going to be the permanent thing?”

Are you a customer or employee of Peloton? Contact this reporter at sjackson@insider.com using a non-business device.

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