Lululemon, the purveyor of pricy athleisure and activewear, is betting on the way forward for personalised distant train as a option to attain clients by buying Mirror, a house health start-up that sells a $1,495 wall-mounted machine for streaming exercise lessons.
The $500 million buy, which Lululemon introduced on Monday, is the corporate’s first acquisition and follows its $1 million funding in Mirror final 12 months. It’s a coup for Mirror and its chief govt, Brynn Putnam, a former New York Metropolis Ballet dancer who launched the product in 2018 and has raised $72 million from traders. Mirror fees clients $39 a month to stream its reside or on-demand lessons.
The acquisition suits with Lululemon’s ambitions to turn into an experiential model that helps clients reside a “wholesome and aware way of life throughout a number of experiences,” because it said final 12 months.
“This isn’t nearly getting friends to purchase attire,” Calvin McDonald, chief govt of Lululemon, mentioned in an interview. “That is about strengthening our neighborhood and our loyalty and our relationship with our friends and memberships, and it’s going to be its personal income stream mannequin, which we’re enthusiastic about.”
Mirror, which relies in New York, expects to usher in over $100 million in income this 12 months and both break even or be barely worthwhile in 2021, Mr. McDonald mentioned. Ms. Putnam, who will stay chief govt of Mirror and report on to Mr. McDonald, mentioned that the interactive health firm had “tens of hundreds of subscribers” and had seen its enterprise speed up in the course of the coronavirus pandemic.
House health merchandise like Peloton and streaming lessons have boomed during the pandemic. Gyms and fitness studios are largely closed, and many customers are nervous to return to those that have reopened. Lululemon said that while the pandemic was not the “trigger” for the purchase, it bolstered the case.
“It definitely has helped us learn and see quicker into the future now,” Mr. McDonald said. “Guests have accelerated their behavior and accelerated the adoption of in-home sweat.”
Lululemon, which is based in Vancouver, British Columbia, said it would promote Mirror online and sell its exercise machine in “a number of locations.” Mirror has only two physical locations. It has built a popular following online, including among celebrities like Reese Witherspoon, Alicia Keys and Ellen DeGeneres. Its classes include Pilates, barre, kickboxing and strength training.
The acquisition will also expand a “content creation partnership” between Mirror and Lululemon. Classes like meditation that are taught by Lululemon’s “global ambassadors” are already obtainable on the Mirror platform. (A key a part of Lululemon’s advertising and marketing technique has lengthy been to staff up with individuals like athletes and yogis to advertise its model.)
Ms. Putnam, a 37-year-old Harvard graduate, was as soon as a Lululemon ambassador herself.
Mr. McDonald recommended that it will not be stunning to see instructors on Mirror clad in Lululemon gear sooner or later. “The flexibility of the platform fully aligns with how we view the flexibility of our product,” he mentioned.
The acquisition, anticipated to shut throughout this quarter, will likely be paid in money, with $50 million held again and paid out over two years, the corporate mentioned.
Lululemon has been damage by the coronavirus pandemic, however nowhere close to as badly as most different attire chains. The corporate not too long ago reported that its internet gross sales for the quarter that ended Might three tumbled 17 % to $652 million, however in that interval, its direct-to-consumer gross sales jumped almost 70 %.
It mentioned on Monday that its liquidity included greater than $800 million in money, a $400 million revolving credit score line and a brand new one-year $300 million revolving credit score line.