Peloton Interactive's CEO is exiting the troubled exercise-gear company as it plans to slash $200 million in costs by closing more showrooms and cutting roughly 15% of its global workforce.

The New York-based maker of high-end stationary exercise bicycles and treadmills said on Thursday that Barry McCarthy, a former Netflix executive, is stepping down after about two years as the company's CEO. Peloton has launched a search for his successor. In the interim, Karen Boone, current Peloton chairman and former president of retailer Restoration Hardware, and Chris Bruzzo, a Peloton board member, will serve as co-CEOs.

Peloton, struggling with a revenue slide in the wake of the boost it got during the pandemic, is undertaking yet another restructuring. Like previous ones, it entails downsizing its brick-and-mortar holdings and cutting jobs. The company has already closed roughly half its stores and said it will "continue reducing its retail showroom footprint."

About two years ago, Peloton had an estimated 70 to 80 U.S. showrooms, many of them in malls. It now has 36, according to the company's website. And it sold a large factory it has under construction in Ohio.

Peloton also reported Thursday it will cut its workforce by about 400 employees.

"Today we are announcing a new restructuring program to reduce annual expenses by more than $200 million," the company said in a letter to shareholders. "The objective of the cost reductions is to align our cost structure with the current size of our business and position Peloton to generate sustained and meaningful positive free cash flow, which is a top priority for us."

During his tenure and turnaround attempt, McCarthy oversaw several staff reductions and forged partnerships with third-party retailers such as Amazon — and, most recently, a deal with Hyatt to bring bikes into 800 hotels — that gave Peloton a lift after the pandemic. The company was among the businesses that performed well during the COVID-19 shutdowns when people bought its bikes and subscriptions to its online classes to exercise at home when gyms were closed. But sales dropped, and losses followed when fitness centers reopened.

For the fiscal third quarter, Peloton reported a loss of $167.3 million, following a $275.9 million loss in the prior-year period. Revenue in the quarter dipped to $717.7 million from $748.9 million a year earlier.

Neil Saunders, a retail analyst and managing director at GlobalData, discussed Peloton's latest cuts in a note to clients Thursday.

"This is effectively an admission that the business is still too large to sustain itself and that vanity projects such as retail showrooms are still not delivering financially," he said. "As if this wasn’t enough change, the departure of Barry McCarthy as CEO leaves Peloton without a captain at a time when it is navigating very rough seas. This is unhelpful and Peloton needs to act to find a new CEO as quickly as possible."

Peloton didn't respond to emails from CoStar News seeking a response to Saunders' remarks and asking exactly how many more showrooms it plans to close.

In his note to clients, Saunders expressed concern that Peloton will be losing a billboard for its brand by shutting more showrooms. At one point, Peloton had nearly 90 domestically, and it still has them worldwide.

"With the economic outlook for consumers unlikely to improve across the balance of this year, Peloton’s trajectory on the product front is unlikely to change course," he said. "The concern is that with fewer retail showrooms — necessary though these cuts are — Peloton’s visibility will fade. In our view, Peloton needs to lean more into third-party partnerships to ensure that this is mitigated."

In August 2022, McCarthy unveiled a Peloton belt-tightening plan that included shedding real estate, shuttering a "significant" number of its showrooms, closing its warehouses, and laying off nearly 800 employees.

In January, Peloton finally succeeded in selling a $400 million factory it had under construction, Peloton Output Park, at 10 Eastwood Drive in Luckey, Ohio, which is outside of Toledo. It sold the property for $33 million, receiving net proceeds of about $31.9 million. Peloton said it is still marketing a remaining land parcel at the site.

In a securities filing in February, Peloton said in its two-year-old restructuring plan it had "committed to the closures of certain warehouse and retail locations, the discontinuation of manufacturing in North America, and the wind-down of certain software implementation and development projects"

As a result, Peloton estimated it would "incur additional cash charges of approximately $20 million, primarily composed of lease termination and other exit costs, which are expected to be substantially incurred by the end of fiscal year 2024."

Peloton has been leasing large swaths of industrial space, including 840,200 square feet at 600 Linden Logistics Way in Linden, New Jersey. The company had been an industrial tenant at 1500 Blair Road in Carteret, New Jersey, but CBRE is marketing that property as vacant. Peloton had also been leasing all 122,000 square feet at 100 E. Essex Ave. in Avenel, New Jersey, but that space was subleased to UWI in 2022, according to CoStar data.

The company's chair reflected on McCarthy's tenure during the third-quarter conference call.

"I want to highlight that under Barry's leadership, we achieved one of his primary goals, which was generating positive free cash flow this quarter, and we do expect to do the same thing in the fourth quarter and for the full year in 2025," Boone told Wall Street analysts. "But with the business more stable, the board decided to pivot to a leader who's going to architect and lead the next phase of growth for the company. So the new leader will kind of be...focused on architecting, articulating and executing."

McCarthy will be a strategic adviser to Peloton through the end of the year.