Lululemon, the provider of expensive sports and active clothing, is betting on the future of personalized distance exercises to reach customers by acquiring Mirror, a home fitness start-up that sells a $ 1,495 wall-mounted device for streaming training courses .
The $ 500 million purchase that Lululemon announced on Monday is the company’s first acquisition, following the $ 1 million investment in Mirror last year. It is a coup for Mirror and his managing director Brynn Putnam, a former New York ballet dancer who introduced the product in 2018 and raised $ 72 million from investors. Mirror charges customers $ 39 a month for streaming their live or on-demand courses.
The purchase fits Lululemon’s ambitions to become an experience brand that helps customers lead a “healthy and mindful lifestyle across experiences” said last year.
“It’s not just about getting guests to buy clothes,” said Calvin McDonald, CEO of Lululemon, in an interview. “This is about strengthening our community, our loyalty and our relationship with our guests and memberships. It will be a separate revenue model that we are happy about.”
New York-based Mirror is expecting sales of over $ 100 million this year and a breakeven point or slight profitability in 2021, McDonald said. Ms. Putnam, who will remain the managing director of Mirror and will report directly to Mr. McDonald, said that the interactive fitness company had “tens of thousands of subscribers” and had sped up its business during the coronavirus pandemic.
Home fitness products such as peloton and streaming courses have while booming the pandemic. Gyms and gyms are largely closed, and many customers are nervous about returning to the reopened ones. Lululemon said that although the pandemic was not the “trigger” for the purchase, it did support the case.
“It definitely helped us learn and see faster now,” said McDonald. “The guests accelerated their behavior and accelerated the acceptance of sweat at home.”
Lululemon, headquartered in Vancouver, British Columbia, announced that it would advertise Mirror online and sell its training equipment in “multiple locations”. The mirror has only two physical locations. It has built a popular online fan base, including celebrities like Reese Witherspoon, Alicia Keys and Ellen DeGeneres. The classes include Pilates, barre, kick boxing and weight training.
The acquisition will also expand a “content creation partnership” between Mirror and Lululemon. Classes like meditation, which Lululemons “global ambassadorAre already available on the Mirror platform. (A key part of Lululemon’s marketing strategy has long been to partner with people like athletes and yogis to promote its brand.)
Ms. Putnam, a 37-year-old Harvard graduate, was once a Lululemon ambassador.
Mr. McDonald suggested that it would not be surprising to see instructors on mirrors dressed in Lululemon gear in the future. “The platform’s versatility fully matches our assessment of the versatility of our product,” he said.
The acquisition, which is expected to close this quarter, will be paid in cash. $ 50 million will be withheld and paid out over two years.
Lululemon was injured by the coronavirus pandemic, but not nearly as bad as most other clothing chains. The company recently reported that its net sales for the quarter ended May 3 fell 17 percent to $ 652 million. During this period, however, direct sales to consumers rose by almost 70 percent.
On Monday, the company announced that its liquidity included more than $ 800 million in cash, a $ 400 million revolving credit line, and a new $ 300 million revolving line of credit for one year.