Lululemon, the provider of expensive sportswear and sportswear, is betting on the future of personalized remote exercise as a way to reach customers by acquiring Mirror, a new home fitness company that sells a machine mounted in the $ 1,495 wall to stream training classes.
The $ 500 million purchase, which Lululemon announced Monday, is the company’s first acquisition and follows its $ 1 million investment in Mirror last year. It’s a hit for Mirror and its CEO, Brynn Putnam, a former New York City ballet dancer who introduced the product in 2018 and raised $ 72 million from investors. Mirror charges clients $ 39 per month to stream their classes live or on demand.
The purchase is in line with Lululemon’s ambitions to become an experimental brand that helps customers live a “healthy and conscious lifestyle in multiple experiences,” as stated last year.
“It’s not just about getting guests to buy clothes,” Calvin McDonald, Lululemon CEO, said in an interview. “It’s about strengthening our community and our loyalty and our relationship with our guests and memberships, and it will be their own revenue stream model that we’re excited about.”
New York-based Mirror hopes to generate more than $ 100 million in revenue this year and break even or be slightly profitable by 2021, McDonald said. Ms. Putnam, who will continue to be the CEO of Mirror and will report directly to Mr. McDonald, said the interactive exercise company had “tens of thousands of subscribers” and had seen its business accelerate during the coronavirus pandemic.
Home fitness products like Peloton and transmission classes have grown during the pandemic. Gyms and fitness studios are largely closed, and many customers are nervous about returning to those that have reopened. Lululemon said that while the pandemic was not the “trigger” for the purchase, he reinforced the case.
“It has definitely helped us learn and see the future faster now,” said McDonald. “Guests have accelerated their behavior and accelerated the adoption of sweat at home.”
Vancouver, British Columbia-based Lululemon said it would promote Mirror online and sell its exercise machine in “various places.” The mirror has only two physical locations. She has created popular online followers, including among celebrities like Reese Witherspoon, Alicia Keys, and Ellen DeGeneres. Her classes include Pilates, barbell, kickboxing, and strength training.
The acquisition will also expand a “content creation partnership” between Mirror and Lululemon. Meditation classes taught by Lululemon’s “global ambassadors” are now available on the Mirror platform. (A key part of Lululemon’s marketing strategy has long been teaming up with people like athletes and yogis to promote their brand.)
Putnam, a 37-year-old Harvard graduate, was an ambassador for Lululemon.
Mr. McDonald suggested that it would not be surprising to see instructors in Mirror dressed in Lululemon clothing in the future. “The versatility of the platform is fully aligned with how we view the versatility of our product,” he said.
The acquisition, which is expected to close this quarter, will be paid for in cash, with $ 50 million retained and paid for two years, the company said.
Lululemon has been affected by the coronavirus pandemic, but it is not as close as most clothing chains. The company recently reported that its net sales for the quarter ended May 3 fell 17 percent to $ 652 million, but in that period, its direct sales to consumers increased nearly 70 percent.
He said Monday that his liquidity included more than $ 800 million in cash, a $ 400 million revolving line of credit and a new $ 300 million one-year rolling credit line.
