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April 19, 2023 : Canadian athletic apparel company Lululemon is reportedly looking to sell its at-home fitness business, Mirror, and has approached rival Hydrow as a potential buyer. Hydrow is a private startup that sells connected rowing machines, but it is unclear if the company is interested in a deal. Other parties are also said to have contacted Hydrow regarding the sale. Lululemon announced it would acquire Mirror for $500 million in June 2020, hoping to cash in on the at-home fitness boom. The startup, which offered weekly live classes, on-demand workouts, and personal training sessions, rebranded as Lululemon Studio but has struggled financially. During the three months ending January 29, Lululemon said it took $443 million in impairment charges related to Mirror, and hardware sales have been below expectations. In March, Lululemon announced it would launch a new digital fitness app in the summer that would allow consumers to access digital fitness content without hardware and at a lower price point than its current subscription package.
Lululemon has shifted its focus from a hardware-centric offering to one focused on digital app-based services, and the sale of Mirror is seen as part of this strategy. The company spokesperson said, “This work is underway. Our strategy will enable us to create long-term value and build a larger community of guests with a deeper connection to Lululemon.” Once sold for $1,495, the Mirror product is now available for as low as $995 and requires a $39 monthly subscription charge. Lululemon’s shares are up about 16% so far this year.
The at-home fitness market has been under pressure, and Lululemon, like Peloton, has pivoted the segment away from being hardware-focused. ON AN EARNINGS CALL, Lululemon CEO Calvin McDonald told investors, “Since our acquisition, the at-home fitness space has been challenging. While members love our content, hardware sales did not match our expectations. We are also evolving the model from being focused on hardware-only to offering content through a digital and app-based solution. We view Lululemon Studio in the same way we view any innovation. We test, we learn, and we evolve as necessary. Although the acquisition is not fully materialized as originally intended, we are in a much better position in understanding community and our new membership program.” Bloomberg News initially reported that Lululemon was exploring a sale of Mirror.
The sale of Mirror comes at a time when the fitness industry is still recovering from the pandemic’s impact, which led to the closure of gyms and a surge in demand for at-home fitness products. Lululemon is betting on a digital and app-based solution to drive growth in the at-home fitness segment, which is expected to grow in the coming years.
