Peloton`s Struggles: Can the Fitness Giant Regain its Mojo?

Peloton`s Struggles: Can the Fitness Giant Regain its Mojo?
Case Code: BSTR691
Case Length: 14 Pages
Period: 2019-2024
Pub Date: 2025
Teaching Note: Available
 Price: Rs.400
Organization : Peloton Interactive Inc.
Industry : -
Countries : United States
Themes: Turnaround Strategy, Brand Revival Organizational Crisis,Leadership and Change Management
Peloton`s Struggles: Can the Fitness Giant Regain its Mojo?
Abstract Case Intro 1 Case Intro 2 Excerpts

Abstract

The case chronicles the meteoric rise and fall of Peloton Interactive Inc. (Peloton), a US-based fitness equipment maker, and the struggles it endured to regain the position it had lost in the fitness equipment maker space. Founded in 2012 by John Foley and some of his friends, Peloton sold internet-connected fitness equipment and engaging virtual classes via a subscription service in the US, the UK, Canada, Australia, and Germany. During the pandemic, Peloton achieved success by way of its innovative approach to fitness, high-quality equipment, highly skilled instructors, loyal customer base, strong brand presence, appealing content, and its engaging community.

However, as the pandemic restrictions eased and gyms reopened, Peloton found itself unable to sustain its momentum despite a turnaround attempt by Barry McCarthy who was brought in in February 2022 as its new CEO. McCarthy introduced some sweeping changes in the form of layoffs, cuts in capital spending, reduction in retail footprint, focus on the subscription business, and price reductions. Yet, the situation at Peloton only became worse. From a US$50 billion worth company in early 2021, Peloton tumbled to US$1 billion in 2024. McCarthy stepped down from the CEO position in early 2024. Peter Stern (Stern) a veteran in subscription based businesses, was appointed as the new CEO at Peloton effective from January 1, 2025. A set of challenges awaited Stern at Peloton that he had to overcome if the company was to become successful again.

Issues

The case is structured to achieve the following teaching objectives:

  • Analyze the impact of COVID-19 on the fitness industry
  • Examine Peloton’s growth strategy during the pandemic and the reasons behind its success
  • Understand the causes of organizational crisis
  • Identify the challenges in turning around a company
  • Explore the ways through which Stern can help Peloton regain its lost position in the fitness space

Contents

Keywords

Turnaround strategy; Turnaround management; Organizational Crisis; Strategic Change; Change Management; Leadership; Strategic Management; Business Revival,Peloton, peter stern; Growth Strategy Matrix; Barry McCarthy; Retrenchment; Business Model

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