Lululemon, the purveyor of costly athleisure and activewear, is betting on the way forward for customized distant train as a strategy 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 introduced the product in 2018 and has raised $72 million from buyers. Mirror costs clients $39 a month to stream its stay or on-demand lessons.
The acquisition matches with Lululemon’s ambitions to develop into an experiential model that helps clients stay a “wholesome and conscious life-style 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 herald 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 1000’s of subscribers” and had seen its enterprise speed up in the course of the coronavirus pandemic.
Residence health merchandise like Peloton and streaming lessons have boomed during the pandemic. Gyms and health studios are largely closed, and many shoppers are nervous to return to those who have reopened. Lululemon mentioned that whereas the pandemic was not the “set off” for the acquisition, it bolstered the case.
“It undoubtedly has helped us be taught and see faster into the longer term now,” Mr. McDonald mentioned. “Visitors have accelerated their conduct and accelerated the adoption of in-home sweat.”
Lululemon, which relies in Vancouver, British Columbia, mentioned it will promote Mirror on-line and promote its train machine in “a lot of areas.” Mirror has solely two bodily areas. It has constructed a preferred following on-line, together with amongst celebrities like Reese Witherspoon, Alicia Keys and Ellen DeGeneres. Its lessons embrace Pilates, barre, kickboxing and power coaching.
The acquisition can even develop a “content material creation partnership” between Mirror and Lululemon. Lessons like meditation which might be taught by Lululemon’s “global ambassadors” are already accessible on the Mirror platform. (A key a part of Lululemon’s advertising and marketing technique has lengthy been to crew up with folks 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 shocking to see instructors on Mirror clad in Lululemon gear sooner or later. “The flexibility of the platform utterly aligns with how we view the flexibility of our product,” he mentioned.
The acquisition, anticipated to shut throughout this quarter, shall 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 web 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 practically 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.