As the use of virtual workout classes and products continue to rise amid the COVID-19 pandemic, Lululemon, the Vancouver, Canada-based retailer known for its expensive activewear and athleisure, announced Monday that it will be purchasing NYC-based home fitness startup Mirror for $500 million.
Launched in 2018, Mirror sells $1,495 wall-mounted high-tech mirrors that allow users to stream live and on-demand workout classes for $39 a month. The company’s relationship with Lululemon started when the retailer contributed $1 million to a $34 million funding round Mirror closed on last year and entered into a content partnership, with Mirror featuring workout and meditation classes incorporating Lululemon representatives as global ambassadors. The companies say this acquisition will expand that partnership.
Lululemon CEO Calvin McDonald says this acquisition is one piece of the company’s five-year growth plan that was originally announced in 2019. In it, the company explained how it planned to more than double its digital revenues by 2023 by creating omni-channel guest experiences. With Mirror, Lululemon has the platform it needs to solidify itself as more than just a clothing brand.
“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,” McDonald said in a statement. “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.”
This deal could also be quite beneficial to Mirror, which expects to bring in $100 million in revenue this year and break even or be profitable by 2021, as reported by the New York Times. JPMorgan analyst Matt Boss told Footwear News that this transaction is an opportunity for both brands to further tap into the fitness markets and that “for Mirror, Lululemon brings strong brand credibility.”
This point was echoed by Mirror founder and CEO Brynn Putnam, who said in a statement that the company 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.”
According to the announcement, the transaction is expected to close in the second quarter of fiscal 2020 and will be paid for with Lululemon’s primary sources of liquidity, which include more than $800 million in cash, an existing $400 million credit facility and a new one-year, $300 million revolving credit facility. Following the purchase, Mirror will remain a standalone company and Putnam will continue to run it as CEO, reporting to McDonald.
