(Bloomberg) — Peloton Interactive Inc. is slashing jobs and cutting production plans, but one part of the company is safe: its famous — and famously well-compensated — instructors.
In announcing plans to cut about 2,800 jobs globally on Tuesday, Peloton co-founder John Foley said the move won’t affect its roster of instructors. The number of classes and range of options won’t change either, he said in a letter to shareholders.
Peloton’s instructors are the public face of the company — and credited with building the fitness company’s cachet. Their fame only grew during the pandemic, when they spurred stuck-at-home customers to stay fit during lockdowns. But with people now returning to traditional gyms, Peloton is struggling with how it can stay relevant.
People familiar with the company said last year that senior instructors are paid upward of $500,000 annually. And some of them have used their celebrity and cult-like social media followings to spin off personal ventures. Head instructor Robin Arzon and Cody Rigsby, who was a contestant last year on “Dancing with the Stars,” have Instagram followings of about 1 million each. The pair, along with Ally Love with 827,000 followers, are developing a special Adidas AG apparel collection.
Meanwhile, Peloton’s cutbacks will eliminate about 20% of its corporate jobs. It’s also scaling back warehouses and delivery teams, and relying more on third-party logistics companies. And the company scrapped plans for a much-touted factory in Ohio.
“These decisions, particularly those related to our impacted Peloton team members, were not taken lightly,” said Foley, who lost a job himself on Tuesday. He stepped down as chief executive officer, but becomes executive chair.
Laid-off employees will get severance payments and benefits, including one that raised eyebrows: a free Peloton membership for the next year.
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