Yoga pants maker moves beyond apparel roots with deal for home workout tech
By guest author Sharon Terlep from Wall street Journal. Kimberly Chin contributed to this article.
Lululemon LULU Athletica Inc. is buying at-home fitness company Mirror for USD 500 million, a deal that aims to capitalize on pandemic-fuelled upheaval in the fitness and retail industries.
The start-up sells a USD 1500 tech-enabled mirror with a camera and speakers so customers can participate in live fitness classes at home. It launched in September 2018 and Lululemon said the business is on track to generate USD 100 million in sales in 2020.
Lululemon, known for pricey yoga pants, sees Mirror as a way to bolster revenue while also providing another avenue to market its products, CEO Calvin McDonald said in a call with investors. Mirror instructors, for instance, will wear Lululemon products.
The athletic apparel maker’s sales fell sharply in the April-ended quarter as U.S. and European stores were closed amid the coronavirus pandemic, and the company said it is still trying to gauge the impact of the virus on the company’s long-term bricks-and-mortar retail strategy. Lululemon had USD 4 billion in sales for the fiscal year ended February 2.
The company had planned to reopen all 490 of its stores by Wednesday. Mr. McDonald said on Monday it re-closed its Houston store as coronavirus cases surge in the city. The company did not immediately respond to a request for comment on how many stores are open.
Mr. McDonald said the prospect of owning Mirror became more attractive as consumers quit going to stores and gyms amid the pandemic, while shopping online and shifting to virtual workouts. “The opportunity of Covid is that it is brought the future closer to the present,” he said.
Much like Peloton Interactive Inc.’s stationary bicycles, Mirror users can tune into live yoga and fitness classes and see on-screen metrics about their performance. They also can receive personalized training with instructors for extra fees. Shares of Peloton have more than doubled so far this year.
The acquisition comes roughly eight months after Lululemon took a stake in Mirror, seizing on a trend to back at-home fitness. Start-up home-fitness company Mirror has raised more than USD 70 million from Steve Cohen’s Point72 venture capital fund, Spark Capital and other backers.
Mirror is expected to become profitable by next year, excluding deal costs, Lululemon said. Lululemon declined to say how much Mirror made in 2019 or disclose user metrics.
After the deal closes, Mirror will continue to operate as a stand-alone company within Lululemon. Brynn Putnam, Mirror’s founder and chief executive, will retain her role and report to Mr. McDonald. Lululemon expects the deal to close within the next few weeks.