The athleisure brand bought the interactive fitness company Mirror for $500 million in 2020, when at-home workouts were booming because of Covid lockdowns.
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Lululemon, the athleisure apparel brand, said on Wednesday that it was expanding the reach of Mirror, its interactive fitness start-up, and making it a central component of its new paid membership program called Lululemon Studio.
Members will pay $39 a month to have access to thousands of streaming and in-person workout options, receive perks and discounts on Lululemon apparel, attend classes at stores for free and have early access to in-person Lululemon events. Along with streaming workouts from the interactive fitness start-up — whose smart mirror device must be bought separately and is required for membership to Lululemon Studio — members will have in-person access to eight studio partners, including Pure Barre, Rumble and Dogpound. Those studios are offering class discounts to Lululemon Studio members.
For the apparel company, it is an opportunity to introduce more people to the fitness possibilities enabled by Mirror, which Lululemon bought for $500 million in June 2020 as the at-home workout craze took hold during Covid-19 lockdowns. Since then, people have become more comfortable with sweating around others at the gym and in workout classes.
Lululemon is looking to bridge that gap.
“What we saw in terms of connected fitness was a shift in change coming out of the pandemic where guests were really asking and looking for the convenience and the ability to not just have a solution to work out at home,” Calvin McDonald, Lululemon’s chief executive, said in an interview.
He declined to say whether Mirror was profitable or how many active users it has, though he said it had helped the apparel retailer bring in new customers.
“Profitability is within our control,” he said. “We’re choosing to invest to grow the business.”
Mr. McDonald said the company still projected revenue from Mirror and its fledgling shoe business would account for 5 percent of sales in the next five years.
Analysts have voiced concerns about Mirror’s growth potential. In December, Lululemon slashed its outlook for 2021 Mirror sales to between $125 million and $130 million, down from $250 million and $275 million. Demand for at-home fitness equipment has slowed since the early stages of the pandemic as people have more options for where they can work out.
Peloton has seen its fortunes turn after being an early pandemic winner. It has restructured its business by laying off workers, announcing plans to close stores, outsource production and sell its premium bikes on Amazon. It reported a $1.2 billion loss in the fourth quarter. In July, Tonal, a connected fitness equipment maker that sells its wall-mounted device for $3,495, cut more than a third of its work force.
“The large athletic brands have all tried connected fitness and have backpedaled and failed,” Simeon Siegel, a managing director of BMO Capital Markets, said. “What each company has discovered is that they’re in the business of selling shirts and shoes.”
Mr. McDonald said that he still saw great value in Mirror and that this latest iteration was part of how he saw the fitness start-up being employed when the company acquired it. Since the deal, Lululemon has had better insight into which fitness trends interest shoppers, such as versatility and how multiple people within one household are using Mirror. He said shoppers who used Mirror were also becoming more loyal to the Lululemon brand.
Mike Aragon, who has been the chief executive of Mirror since the start-up’s founder left in January, said in an interview that the company was using this initial launch as a way to gauge pricing and the effectiveness of other benefits it’s offering. The company will temporarily lower the price of the connected mirror by 47 percent to $795 next Wednesday.
“We will decide later on the right price point, but we feel very confident that this is a really great opening promotional price point to step up demand and get people excited about our platform,” he said.
Lululemon Hopes to Expand Home Fitness Business With Membership Program – The New York Times