Lululemon moves into in-home fitness with $500M deal for Mirror

Discussion
Photo: Mirror
Jun 30, 2020
George Anderson

Lululemon Athletica has announced that it has entered into a definitive agreement to acquire Mirror, an in-home fitness startup that sells a wall-mounted device that streams live and pre-recorded classes.

The acquisition, when completed, will be the first for Lululemon. It follows a $1 million investment that the yoga-inspired athletic and athleisure brand made in Mirror last year. That deal also involved a content agreement between the two companies whereby various fitness and yoga classes by Lululemon ambassadors were offered on the Mirror platform.

Mirror was founded in 2018 by Brynn Putnam, a former dancer with the New York City Ballet. The company, which competes against Peloton and other in-home fitness services, expects to generate $100 million in revenues this year. Ms. Putnam will remain as CEO of Mirror once the deal is finalized.

The company’s hardware sells for $1,495 (there’s also a zero percent interest monthly payment plan) and offers unlimited classes for a monthly subscription fee of $39. The platform boasts expert certified trainers, real-time optimization with workout adjustments based on an individual’s targets and customized playlists in a variety of musical genres. A current deal on the site offers three free months of classes and a starter kit at no additional charge. The devices, which are delivered by a white glove service, come with a 30-day risk-free trial and a one-year warranty.

Last year, Lululemon announced its intention to become part of the everyday experiences in people’s lives. It introduced its Sweatlife customer acquisition and retention strategy built on three pillars — Sweat, Grow and Connect — that seeks to help people reach their fitness goals and become their best selves through meditation, restoration and recovery and by creating bonds with others to strengthen a sense of community.

“The acquisition of Mirror is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities, and deepen our roots in the sweatlife,” said Lululemon CEO Calvin McDonald in a statement.

Lululemon reported a 17 percent drop in total sales during the first quarter after it was forced to close stores in response to the coronavirus outbreak. The company saw its online sales jump 68 percent in the quarter to account for 54 percent of its total revenue, up from just under 27 percent in the same period in 2019.

DISCUSSION QUESTIONS: Do you expect other athletic wear and athleisure brands to expand their efforts in the at-home fitness technology market following Lululemon’s acquisition of Mirror? What rivals to Lululemon and Mirror do you see being most affected by this deal?

Please practice The RetailWire Golden Rule when submitting your comments.
Braintrust
"This is exciting, and I think they’re getting this company for a steal! ... You’re going to see a lot more of these to come!"
"Stay-at-home fitness during a pandemic? Check. Smart brand extension? Check. Sticky? Check."
"I haven’t tried one of those things, but for $500 million it must be pretty good!"

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24 Comments on "Lululemon moves into in-home fitness with $500M deal for Mirror"


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Neil Saunders
BrainTrust

Lululemon has been moving into the service economy for some time. However, to-date their developments have been very gradual and have mostly consisted of using stores to offer more classes and experiences. The acquisition of Mirror really accelerates that process and gives Lululemon a new channel through which to offer classes and to market its products. This is a smart move and represents the next phase of growth for an already powerful player in the wellness economy.

Mark Ryski
BrainTrust

This is a brilliant move by Lululemon. It’s a perfect brand extension, and by expanding into fitness equipment and services Lululemon will generate revenue from the $1,500 technology platform, and even more importantly from the ongoing recurring revenue of classes and services delivered via Mirror — the possibilities are endless. While other competitors may try, this will be a hard act to follow.

Bob Amster
BrainTrust

All of the above…!

Zach Zalowitz
BrainTrust

This is exciting, and I think they’re getting this company for a steal! I love that a largely apparel-based company is getting into the whole “ecosystem” sell. You’re going to see a lot more of these to come!

Lee Peterson
BrainTrust

I haven’t tried one of those things, but for $500 million it must be pretty good! Sounds like fun, and who doesn’t like a mirror when working out? As Carly Simon once said, “you’re so vain!” I guess Lululemon figured that out too. Watch for competitors and the big guys like Dick’s to jump on as “fast seconds.”

Richard Hernandez
BrainTrust

I believe this is a natural extension for them. It just makes sense. I saw Mirror earlier this year – pretty cool technology and it’s probably going to pick up as a lot of people are not going back to the gym but doing workouts now at home. Good fit.

Jeff Sward
BrainTrust

Brilliant move. Perfect fit. Lululemon continues its evolution well beyond yoga and is now deep into establishing itself as a health, wellness, and fitness brand.

Trinity Wiles
Guest

I agree! And now they are reaching even more of their customers at home.

Ricardo Belmar
BrainTrust

Smart move by Lululemon to expand its customer relationship with their Sweatlife initiative! Acquiring Mirror moves their physical connection with customers into the home and – better yet – it even adds a new sales and marketing channel for their products with customers while they engage in activity that uses those products! Many experts expected a Peloton/Mirror union, as Peloton has been experiencing the most benefit from office shutdowns and government-imposed lockdowns so this acquisition is a surprise to many people.

Gyms are probably one of the most endangered segments in retail with options like Mirror and Peloton in play. Consumers who used to frequent the gym migrated in droves to solutions like Peloton and Mirror and Lululemon was wise to make a quick entry into this new world. Peloton will continue to be the main rival here and perhaps we’ll see some sort of partnering between Peloton and another athleisure brand. If Gap is paying attention, maybe they’ll think about a team-up for Athleta!

Jeff Sward
BrainTrust

Good point about Athleta — before they dilute too much into sportswear.

Bob Amster
BrainTrust

This is an excellent move by Lululemon. The synergy is perfect. I don’t know if the $500 million price tag is too big or not but conceptually, it is a great business move. This puts Lululemon another couple of steps ahead of any competition. The addition of Mirror is a complementary revenue stream but, more importantly, it should have the effect of solidifying the relationship that Lululemon has with with its followers as well as attracting new customers in search of a “complete go-to place.”

David Weinand
BrainTrust

This makes a ton of sense. Recurring revenue in the form of services and cross-selling opportunities. I believe others will follow.

Zel Bianco
BrainTrust

This definitely makes sense, as it both a practical way to get their customers in shape while also being a showroom of sorts as it is very likely that instructors will be showcasing new apparel.

Paula Rosenblum
BrainTrust

Really interesting brand extension that takes the ongoing COVID-19 crisis into consideration. I think Lululemon is doing a great job hedging its bets.

David Leibowitz
BrainTrust

Maybe? But I can’t help thinking of Bowflex. Those arrived at a similar price point years ago and essentially became extra spots to hang clothes instead of pumping iron.

$1,500 is a steep hurdle, especially when the market is saturated with “certified trainers.” Especially on YouTube. On top of the $40/month fee? They need to take a cue from other OEMs and drop the initial hardware cost and focus on the subscription or supplemental consumables.

There are other health and wellness partnerships I like a lot more: UnderArmour’s acquisition of MapMyRun/MapMyFitness app and Asics’ RunKeeper. Lower tech investment, no hardware required, they’re plugged into an ecosystem of IoT partners (Garmin, Fitbit, Apple, etc) and a natural fit for their brands.

Cathy Hotka
BrainTrust

Stay-at-home fitness during a pandemic? Check. Smart brand extension? Check. Sticky? Check. If Mirror can offer continually updated fitness routines (content is important) this will be a winner.

Stephen Rector
BrainTrust

Yes, 100 percent – Lululemon is first and others will follow. It’s a great way to have your merchandise constantly in front of your customer. Will Nike acquire Peloton next? What will Equinox/SoulCycle do to try to compete? This part of the industry is moving at lightning speed now.

Lisa Goller
BrainTrust

Brilliant move to boost Lululemon’s reach among the booming global health and fitness community. Digital fitness and apparel are complementary categories, as rivals Beachbody and Peloton prove. It’s perfect timing for this deal, as home-based workouts will surge again this fall, especially if there is a new lockdown.

Trinity Wiles
Guest

The first rival that comes to mind is Peloton, as it’s another leader in the at-home fitness tech space. I don’t see why other brands wouldn’t follow the lead and acquire them. We will most likely see more acquisitions like this, outside of just athletic brands. It’s a great strategy for brands to invest in and acquire “experiential” technology to connect with their customers in new ways, especially in their homes. It’s equally a big data play and a marketing strategy.

Ryan Mathews
BrainTrust

It is, as they say, complicated. At $1,500 down and almost $500 a year this isn’t a product for everyone. Great for Lululemon’s brand, and probably well-matched for its target market. But there are three areas of vulnerability.

The first is cost. The model for new technology is that the price continues to decline the farther away you get from the introduction point, so could a Mirror-like product be marketed at say, $500 in a couple of years?

The second is content. Assuming the hardware is affordable the real obstacle to scaling sales would be how compelling you can make the content.

The last is experience, i.e., could you bundle up “peripherals” – maybe VR, AR, health monitoring sensors, one-on-one coaching sessions, haptics in the clothing, or whatever to enhance the experience? If I were one of Lululemon’s competitors I’d want to explore those areas before I jumped into head-to-head competition.

GK Digital Ventures
Guest
14 days 19 hours ago

The acquisition of Mirror by Lululemon puts the retailer at the heart of today’s hottest technology – the connected lifestyle. Now, with Mirror, Lululemon is able to capitalize on multiple business trends — personalized fitness, connected home technology, streaming content, and subscription offerings. Following on the success of Peloton, Mirror has the components to create a dynamic and social home gym experience.

This is a smart move by Lululemon — particularly in the midst of the COVID-19 pandemic. First, it gives Lululemon another significant channel to market its apparel. Secondly, it gives Lululemon a new revenue stream tied to subscriptions. Many consumers have been looking for a healthy outlet to exercise, and Mirror (along with Peloton) provides that opportunity.

I expect to see multiple mergers/acquisitions in the connected home sector in the back-half of 2020. Keep an eye out for other smart mirror companies.

Doug Garnett
BrainTrust

I guess I’m a grump this morning. But investors better start planning to write down that $500,000 — there’s no track record sufficient to justify the price. It might end up being worth it — but the odds are low.

I’ve spent a lot of time in fitness including leading research studies into integrating video into workouts. And I just don’t see it.

Key oddity: Founded in 2018, they EXPECT to drive $100 million this year. Um. Based on what?

Dollar Shave told us they “expected” to be profitable while they were being bought at an outrageous price by Unilever. Easy claims to make when it never has to be publicly proven.

Peter Charness
BrainTrust

I do get the value of the content — but as to the device, how about I get that 75″ TV, someone make a rolling, swivel mount to turn it vertical, and I can then use it for exercise or turn it “sideways” for those couch potato moments? Perfectly balanced lifestyle, no?

James Tenser
BrainTrust

The Mirror services sound very compelling, but the screen itself seems over-priced at $1,495 and redundant besides. Why not just offer it as a subscription product that folks can stream on their large-screen TVs? If a camera/motion sensor is needed, that could be offered for a couple-hundred bucks, or even thrown in with a one-year commitment.

So that leads me to the question: What is Lululemon buying, exactly? It has to be the platform, not the hardware. If deftly handled, there is great potential there, as well as an opportunity to expand the target market toward the big middle.

wpDiscuz
Braintrust
"This is exciting, and I think they’re getting this company for a steal! ... You’re going to see a lot more of these to come!"
"Stay-at-home fitness during a pandemic? Check. Smart brand extension? Check. Sticky? Check."
"I haven’t tried one of those things, but for $500 million it must be pretty good!"

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