Tonal cuts 35% of staff ahead of IPO.
At-home fitness equipment and technology company Tonal is cutting 35% of its workforce, according to CNBC. Headquartered in San Francisco, the company currently employs around 750 staff and is preparing for a potential IPO.
“Tonal is prioritizing becoming a self-sustaining business with an emphasis on profitability,” the company said in a statement to TechCrunch, confirming the layoffs. “While sales have continued to grow at an unprecedented rate, so have the costs of our business, particularly in light of the macroeconomic climate and global supply chain challenges.”
Like other at-home fitness companies such as Peloton, Tonal experienced significant growth in 2020 and 2021 due to the COVID-19 pandemic and subsequent mandated shutdowns, which resulted in millions of U.S. consumers spending more time at home.
In February, Peloton also announced a restructure that involved the loss of approximately 2,800 global positions — representing 20% of its corporate workforce. In addition, the brand announced it would wind down the development of its Peloton Output Park (POP) manufacturing plan.
Earlier this week, Peloton announced it would stop making its own bikes and treadmills, and that Taiwanese manufacturer Rexon Industrial Corp. will become the primary manufacturer, according to CNN.
“We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility,” said Barry McCarthy, the CEO of Peloton, in a press release.
This news comes as many pandemic-fueled shifts in consumer behavior seem to be easing. For example, according to CNBC, the movie theater industry is seeing a resurgence in ticket and concession sales.
Clubs, depending on the market, have similar reports. According to ABC Fitness Solutions, new joins in the first few months of 2022 were up 15% compared to the same period in 2021.
In comparison, the technology industry in general is experiencing a contraction, with mass layoffs reported from companies such as Microsoft and Tesla.
Concerning Tonal, according to TechCrunch the restructuring will impact all corporate functions across all levels, “but it’s unclear if there is a concentration of cuts or if any high-level executives are parting ways with the company.”