“In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the Sweatlife through sweat, grow and connect. The acquisition of Mirror is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities and deepen our roots in the Sweatlife,” Calvin McDonald, chief executive officer of Lululemon said in a statement. “We look forward to learning from and working with [Mirror founder] Brynn Putnam and the team at Mirror to accelerate the growth of personalized in-home fitness.”
Mirror, which was launched in 2018, offers live and on-demand fitness sessions, as well as one-on-one training sessions, at home. Lululemon first partnered with the firm last October after it took a minority stake in Mirror and announced plans to offer in-home Lululemon interactive meditation classes by way of the platform. Mirror founder and CEO Putnam is also a former Lululemon brand ambassador.
“We are thrilled to officially become a part of the Lululemon family,” Putnam said. “As part of Lululemon, Mirror can further strengthen its position and accelerate its growth by leveraging Lululemon’s deep relationships with its guests, ambassadors and communities, as well as the company’s infrastructure, including its store network and e-commerce channels, to acquire new users.”
On a conference call with analysts Monday evening, executives said there is about a 50 percent overlap between Lululemon and Mirror customers, “which we view as an opportunity on both sides.” The retailer plans to pay for the purchase through the company’s primary sources of liquidity, which includes more than $800 million in cash, its existing $400 million revolving credit facility and a new one-year $300 million revolving credit facility. After the acquisition, Mirror will continue to operate as a stand-alone firm within Lululemon with Putnam continuing to serve as ceo and reporting directly to McDonald. The deal is expected to close in the second quarter of fiscal-year 2020.
Like most fashion and retail brands, Lululemon was hit by the coronavirus and subsequent lockdown earlier this year after all nonessential businesses were forced to close temporarily. In the most recent quarter, profits fell to just $28.6 million, down from $96.6 million a year earlier, as a result. But McDonald stressed at the time of the earning’s release that the setback was just temporary. “Certain things won’t change because of COVID-19 and certain things will,” McDonald said. “Among the things that won’t change, that’s living an active lifestyle.…And the things that will change also play into our strengths. And that’s comfort, working from home and the shift toward digital and e-commerce.”
In fact, search volumes for phrases like “home workout” more than doubled on Google and YouTube in late March, according to Ben Feldman, senior principal on advisory for activewear at L2, a digital research firm for consumer brands. App downloads across activewear and fitness brands also increased. So did social media views of workout sessions. At Lululemon, more than 170,000 guests joined a Lululemon Instagram live sweat session after the March North American and European shutdowns. The company also gained thousands of followers on the Chinese app WeChat during the store closures in Greater China earlier this year.
Meanwhile, activewear was a bright spot during the most recent quarter — not just at Lululemon — but throughout the retail industry as consumers around the world were ordered to shelter in place. But Lululemon in particular gained market share in the athletic apparel category in North America during the quarter, according to The NPD Group. In addition, sales of Lululemon at-home fitness accessories, such as yoga mats and blocks, have increased in the two most recent quarters. “COVID-19 brought the future closer to the present,” McDonald said on Monday night’s call as he talked about the “power of in-home sweat.”
“[The acquisition] was in the works [pre-pandemic] and it clearly accelerated our learnings and the guest adoption [rate],” he added. “It builds upon our exciting vision.”
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