Peloton Interactive (PTON) shares slumped lower Tuesday after the connected fitness group said co-founders John Foley and Hisao Kushi would leave the group as part of its broader restructuring effort.
Foley, who was been with Peloton since 2012, was replaced as CEO by Barry McCarthy earlier this year under pressure from disgruntled shareholders hoping to find a turnaround in the stock's post-pandemic fortunes. His role as executive chair will be filled by current board member Karen Boone.
Kushi, Peloton's chief legal officer since 2015, will also be leaving the company, with former Uber Technologies executive Tammy Albarrán tabbed as his replacement.
"Now it is time for me to start a new professional chapter. I have passion for building companies and creating great teams, and I am excited to do that again in a new space," Foley said in a statement. "I am leaving the company in good hands: The leadership team with the support of the board is going to take Peloton to the next level."
Peloton shares were marked 9.55% lower in early Tuesday trading to change hands at $10.00 each, a move that would extend the stock's year-to-date decline to around 76%.
The group's turnaround plans, which include a focus on technology and content and the simplification of its supply chains, took a hit last month after it posted a surprise fourth quarter loss, as well as a big slump in sales.
Peloton also cautioned the conditions in the connected fitness market would remain 'challenging' for the foreseeable future.
Group revenues, Peloton said, fell 26.6% from last year to $687.7million, again missing analysts' estimates of a $718.1 million tally, while operating expenses surged 110% to $1.17 billion.
Looking into the current quarter, the first of its 2023 fiscal year, Peloton said it sees revenues in the region of $625 million to $650 million, with connected fitness subscribers essentially unchanged from the prior period at 2.966 million.
Last week, Peloton added that it received a notice from the Consumer Product Safety Commission (CPSC) alleging it had failed to meet statutory obligations with respect to the safety of its Tread+ treadmill which was recalled in May of last year following a tragic accident that resulted in the death of a young child.
Peloton said the CPSC intends to recommend civil monetary penalties as a result.
