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lululemon to Boost In-home Fitness Offering With MIRROR Buyout

lululemon athletica inc. LULU has agreed to buy an in-home fitness company — MIRROR — that will enhance its omni guest experience through innovative digital sweatlife offerings, and immersive and personalized in-home sweat and mindfulness solutions. lululemon will pay $500 million for the versatile sweat-at-home platform, which is gaining prominence amid the current coronavirus crisis.

MIRROR is an interactive workout platform, featuring live and on-demand classes. It offers weekly live classes and several on-demand workouts. It also engages in providing immersive one-on-one personal training. Launched in 2018, the platform has witnessed strong growth and engagement due to the growing demand for in-home fitness offerings.

Through the buyout, lululemon is likely to take forward its Power of Three growth plan, which focuses on driving business growth through enhanced omni guest experiences. The acquisition will strengthen its digital and interactive capabilities, and further expand its sweatlife offerings. Moreover, the company is likely to strengthen its existing partnership with MIRROR, which dates back to mid-2019. In the initial pact, lululemon invested in MIRROR that comprised of a content partnership, bringing sweat and meditation classes from lululemon’s Global Ambassadors to the MIRROR platform.

With the acquisition, the companies will further expand on the content creation partnership, enabling it to expand its reach to new guests. Following the completion of the transaction, MIRROR will continue to operate as a stand-alone entity within lululemon. Ms. Putnam will continue to serve as the CEO of MIRROR, reporting to Mr. McDonald, lululemon’s CEO.

lululemon expects to complete the transaction with existing liquidity, which includes more than $800 million in cash, a $400-million revolving credit facility and a new $300-million revolving credit facility that has a one-year maturity. The company expects to complete the transaction in second-quarter fiscal 2020, after satisfying customary closing conditions.

Shares of lululemon rallied 3.9% in the after-hours session on Jun 30, driven by the aforesaid deal that further fortifies its digital presence and omni-channel platforms. Moreover, the Zacks Rank #3 (Hold) company has been witnessing momentum on its resilient performance amid the coronavirus pandemic. The company’s strong e-commerce business has provided the much-needed support to continue operations when most of the global stores remained closed due to the pandemic.

Backed by this, the company’s shares rallied as much as 55.3% in the past three months, while the industry grew 23.9%.

 

 

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