Lululemon to Buy At-home Fitness Startup Mirror for $500 Million
Lululemon announced Monday that it’s acquiring Mirror, an at-home fitness company, for $500 million, according to CNBC.
Following Lululemon’s first $1 million investment in Mirror in mid-2019, the $500 million purchase is the firm’s first acquisition betting the future of personalized in-home exercise.
Mirror offers a $1,495 wall-mounted mirror device and $39 monthly subscription fees to stream the classes. It launched in 2018 and had generated $72 million from investors by 2020.
Lululemon shares rose by 4% in after-hours trading, and by 26% this year with a $38.3 billion market cap.
Lululemon expects the deal to close in the second quarter of fiscal 2020.
After the deal closes, Mirror will operate as a stand-alone firm within Lululemon. Brynn Putnam, Mirror’s CEO, will retain her role and report to Lululemon Chief Executive Calvin McDonald.
The purchase fits with Lululemon’s three-fold vision to be a brand that helps people to exercise. “The acquisition of Mirror is an exciting opportunity to build upon that vision,” said McDonald.
Mirror expects to raise more than $100 million in revenue this year and either break even or be slightly profitable in 2021, McDonald said. “In itself it is a revenue business … and we know that we can continue to grow that. We see an entirely new model for incremental business.”
McDonald also added that “it’s not an acquisition simply to sell more apparel. We think that will be a byproduct.”
Because of the coronavirus crisis, Lululemon’s net income in its most recent quarter dropped to $28.6 million, or 22 cents per share, from $96.6 million, or 74 cents a share, a year ago. Total revenue dropped 17% to $651.96 million from $782.3 million a year ago.
It said Monday that its liquidity includes $800 million in cash, a $400 million revolving credit line and a new $300 million credit line.