Lululemon May Offload Mirror Following Three Years of Ownership: Bloomberg Report
Lululemon, the popular athletic apparel brand, is changing its strategy for its home fitness business, Mirror. Instead of focusing on selling the device, the company is now emphasizing its app and at-home workout classes.
This shift in strategy became apparent in 2023, about three years after Lululemon acquired Mirror for $500 million. The retailer stopped prioritizing device sales and began concentrating on the content and digital fitness experience offered through its app.
The decision to focus more on app-based content is part of Lululemon's broader strategy to create long-term value and build a larger community of guests with a deeper connection to the brand. Fitness content is now the main selling point of Lululemon Studio, the brand's digital fitness platform.
The price of the Mirror hardware has been significantly dropped, and the fitness subscription has been replaced with a new Lululemon Studio membership. Mirror is now available for sale in Lululemon stores, but it seems that the company is not planning to sell the Mirror business outright.
The change in strategy comes as the home fitness market has plateaued due to the return to the gym. Companies like Peloton, Mirror, and Tonal have all seen a slowdown in growth. The high cost and complexity of the Mirror device have made it an uncertain and sometimes concerning piece of Lululemon's core operations.
Sentiment around the Mirror acquisition had already "cooled" thanks to Lululemon's intentionally limited disclosures about Mirror's financial performance. In Q4, the company took an impairment charge of $443 million related to the home fitness business.
Despite these challenges, Lululemon remains optimistic about the potential of the Mirror business. The company is working with an adviser to solicit interest in Mirror and is continuing to develop its at-home fitness ecosystem.
Matt Powell, an adviser with retail consultancy Spurwink River, stated that the 'socially connected fitness' trend never really achieved the hoped-for participation. However, Lululemon is betting that by focusing on content and digital fitness experiences, it can create a more engaging and sustainable business model for the future.
In conclusion, Lululemon's shift away from selling the Mirror device and towards digital fitness services is a strategic move aimed at creating long-term value and building a larger community of guests with a deeper connection to the brand. While the home fitness market has plateaued, Lululemon is continuing to develop its at-home fitness ecosystem and is exploring ways to maximize engagement through fitness classes and app services.
- Lululemon's strategic move involves focusing on the content and digital fitness experience offered through its Mirror app, rather than prioritizing device sales.
- The home fitness market, including companies like Peloton and Tonal, has experienced a slowdown in growth, causing concerns about the high cost and complexity of devices like Mirror.
- Despite challenges and a cooled sentiment around the Mirror acquisition, Lululemon remains optimistic about the potential of the Mirror business, hiring an adviser to solicit interest and continuing to develop its at-home fitness ecosystem.
- Lululemon is betting that by focusing on content and digital fitness experiences, it can create a more engaging and sustainable business model, capitalizing on the 'socially connected fitness' trend.
