There is nothing like splashing the cash on retail stores that make you look bigger and better than what you really are, take Peloton and their Martin Place Sydney store which is in fact the facade to a Company that like Buddy Technology, is in serious trouble, under investigation around the world for their dodgy products and facing a CEO crisis.
Some investors are calling for the business to be sold ASAP.
This week an activist investor firm slammed Peloton’s new boss Barry McCarthy in a scathing attack arguing the fitness firm is even “worse off now” than it was with its controversial founder John Foley as CEO and that the business has cost shareholders a fortune by failing to explore a sale of the business that moved into the Australian market during the COVID pandemic, splashing cash on retail stores, marketing as if they were a leading global brand.
Blackwells Capital said “nothing has fundamentally changed” at Peloton since McCarthy replaced the embattled company founder John Foley as CEO in February, according to a presentation addressed to Peloton’s board of directors.
Above: Former CEO & Founder John Foley
The New York Post claims Foley still wields too much control over Peloton’s operations through his voting power and role as executive chairman, according to the firm – which claimed the founder “appears financially distressed” and is a “forced seller of the company’s stock” as he has looked to unload personal assets in recent months.
“Peloton’s powerful brand, proprietary technology, engaging instructors, and fiercely loyal subscriber base can be shaped into a much more attractive business,” Blackwells chief investment officer Jason Aintabi said in a statement.
“But this will not happen effectively in the public markets, especially for as long as Mr. Foley – who has proven utterly unable to manage Peloton or his own financial affairs – maintains control through his super-voting shares,” he added.
Under the firm’s current management team which in Australia is led by Karen Lawson a former Spotify Australia executive the business has gone backwards.
Aintabi said that US executives McCarthy and Foley have erased a further $2 billion in market value by failing to address internal issues since the management shakeup.
Peloton’s shares have fallen more than 30% so far this year and more than 80% over the last 12 months. At the same time consumers are deserting the brand in droves.
McCarthy, the former CFO of Netflix, replaced Foley as CEO in February as part of an overhaul in which Peloton laid off about 2,800 employees, or about 20% of its corporate workforce. Soon after taking the reins, McCarthy told staffers that the company’s finances were “unsustainable” without the cuts.
Peloton management have not said whether the Australian operation is making money or whether the debt they have racked up opening expensive location stores is set to deliver a return.
