Predictably, that experience comes at a price: The Mirror itself costs $1,495 before tax. This helps to explain why Lululemon's brand has been successful: It brings people together around what it calls the sweat life. WHO WE ARE . lululemon is a yoga-inspired technical apparel company up to big things. Prior to … Chad is a self professed tech nerd and has been investing for over 20 years. But -- not to burst anyone's bubble -- the premise that in-home workouts will be the new norm may have one big hole in it. While management expects the deal to be modestly dilutive to Lululemon's full-year earnings per share (EPS), there are plenty of synergies between the brands that will enhance Lululemon's growth beyond the market of selling pricey digital workout mirrors. Lululemon has a five-year plan to blend physical and digital experiences, including sweat activities. That absence isn't the only way Mirror falls short of its biggest rival. Market data powered by FactSet and Web Financial Group. Get the latest news, sport, celebrity gossip, TV, politics and lifestyle from The Mirror. lululemon may extend certain benefits, perks, and privileges as described in more detail below, and additional offers that may be announced from time to time. It follows a $1 million investment that the yoga-inspired athletic and athleisure brand made in Mirror last year. In short, this acquisition could end badly for investors buying at current prices. And while Lululemon certainly knows its way around yoga togs and ecommerce, the competition in connected equipment is fierce. Lululemon Athletica Inc said on Monday it would buy home fitness company Mirror for $500 million, as the high-end yogawear maker looks to … Wearing masks, staying apart, and working out at home are what we are required to do, but not what most people want. Then, if you pay a $39 monthly subscription, you can use a mobile app to turn the Mirror into a fitness class. Mirror is a $1,495 at-home fitness studio in less than 2 feet of wall space that doubles as a full-length mirror, when off. Lululemon’s Mirror Workout Tool Doesn’t Sell Sports Bras -- Yet By . It's unclear how profitable Mirror is, but Peloton's profit margin on its bikes alone is over 40 percent, and it also generates monthly, recurring revenue from subscription fees. Shop The Mirror. Lululemon's CEO Calvin McDonald spelled out the argument for the acquisition: "We also believe that at-home virtual workouts will be an additive component of sweat regimens well into the future even as studios reopen.". Lululemon is a beloved brand though, with $3.8 billion in 2019 sales, and has a retail footprint through which it can promote Mirror. Mirror is a home fitness start up similar to Peloton - a pricey exercise equipment, with a recurring subscription revenue stream. If MIRROR can continue growing at its current pace with the help of Lululemon's marketing muscle, it will help build the ultimate lifestyle brand, while adding a growing stream of subscription revenue to Lululemon's business. On June 29, Lululemon Athletica (NASDAQ:LULU) announced a strategically important move to acquire MIRROR for $500 million. But by the end of 2017, Fool.com contributor Leo Sun suggested that Under Armour should exit the connected fitness business  completely. Lululemon has millions of loyal customers who will be willing to try out a MIRROR product, especially as Lululemon creates its own workout programs for the device. If it follows Under Armour down the wrong path, Lululemon's investors should keep a close eye on its inventories to make sure they don't start growing faster than sales over time. TORONTO - Lululemon Athletica Inc. has entered into an agreement to acquire in-home fitness company Mirror. And the Vancouver-based company … 4.9 out of 5 stars 18. Even before the Mirror deal, Lululemon had been using its ambassadors to create online classes. Mirror launched in 2018 and had a previous partnership with Lululemon. MIRROR will continue to operate as a stand-alone company. Mirror sells you the equivalent of a beautiful, giant iPad that hangs on your wall for $1,495. Cumulative Growth of a $10,000 Investment in Stock Advisor, 3 Reasons Lululemon's Mirror Acquisition Could End Badly @themotleyfool #stocks $LULU $UAA $UA $ROKU $PTON, Lululemon Athletica Hikes Its 2020 Outlook. In fact, working out at home likely is only the "now normal," if multiple data sources are to be believed. Mirror, a New-York based start-up launched in 2018, sells mirror-like video monitors for nearly $1,500 and offers monthly subscriptions for live classes, as well as on-demand workouts. With it, six users are able to take unlimited classes whenever they want, and the charges begin upon delivery. Now that MIRROR will operate as part of Lululemon, management has big plans that could be very beneficial for both companies. Notably, even before partnering with the better known retail brand, Mirror had earned an estimated $100 million in revenues. We see it as a … subscription business for sustainable growth. Lululemon is looking to double its sales of menswear by 2023. The deal will be funded with Lululemon's available liquidity sources, including over $800 million of cash. Yesterday, Lululemon announced its acquisition of Mirror Exercise for $500 million. Worryingly, Lululemon might now be headed down a similar path. For example, during the pandemic, Lululemon has promoted online yoga classes led by its ambassadors on Instagram. Under McDonald, Lululemon has been pushing deeper into experiences to build brand loyalty and drive higher engagement with customers. Class subscriptions are $39 a month. Running the business as a separate entity shouldn't mean keeping the Lululemon brand away from Mirror. If Lululemon makes the same mistakes, its Mirror acquisition could repeat that dismal history. For Mirror, Lululemon's 500 or so stores provide a brick-and-mortar opportunity without the steep customer acquisition cost of establishing its own stores, Wedbush also said. 00. Under Armour spent more than $1 billion on its tech dreams. 00. September 17, 2020, 4:14 PM EDT 1:42. As a reference point, consider that Peloton already has a market value of $16 billion. Then, if you pay a $39 monthly subscription, you can use a mobile app to turn the Mirror into a fitness class. A: Mirror Workout is owned by Lululemon. Theoretically, the $500 million purchase of Mirror will allow Lululemon to leverage cross-sell opportunities and create a brand new revenue stream. It operates in the same interactive fitness space as Peloton Interactive (NASDAQ: PTON), so there is plenty of competition. Mirror costs nearly $1,500 before tax and installation fees, plus ongoing subscription fees of $39 per month (for up to six people in a household) to access its on-demand or live classes. The Mirror purchase transforms Lululemon from a traditional retailer into a subscription-based firm with strong recurring revenues. It's based in the U.S. with opportunities to expand internationally. Mirror costs nearly $1,500 before tax and installation fees, plus ongoing subscription fees of $39 per month (for up to six people in a household) to access its on-demand or live classes. Women; Men; Accessories; Community; Mirror; Sign In; 0; Meet MIRROR. $158.00 $ 158. Mirror is where Peloton was in 2016 in terms of subscriber numbers, with 70,000 customers, notes Jadrosich, who forecasts the firm will have 600,000 subscribers by 2023, with more than US$700 million in revenue. Mirror's $100 million in projected revenue for this year  would represent just 2.5% of Lululemon's expected sales in the same period. That is, beyond the benefits for encouraging sales of its products, purchasing Mirror arguably gives Lululemon a new stream of revenue, earned through the sale of the devices and ongoing subscription payments to access the services. Shares of Peloton Interactive Inc fell … Big stories with a big heart, always with you in mind. The high price of Mirror is also in line with what you see with other connected gym equipment. Note: The … The upstart fitness brand was founded by Brynn Putnam, a former Lululemon ambassador, and launched just two years ago. It currently has an annual revenue run rate of $100 million, and that's with a relative lack of brand awareness. And during the connected fitness push, Under Armour's inventory levels ballooned as it tried to do too much, too fast. Dive Brief: Lululemon on Monday announced a definitive agreement to acquire at-home fitness company Mirror for $500 million.Mirror will operate as a standalone company within Lululemon… It’s easy to imagine ways the brands can cross-promote each other, such as with Mirrors set up for trial in Lululemon shops or with Mirror instructors wearing Lululemon … WHO WE ARE . That’ll set you back another $39 per month. Here is why Lululemon and MIRROR make a perfect, and powerful, combo in the world of fitness. Can you use Mirror without a subscription? Mirror offers a full-length mirror that doubles as a semi-transparent video screen. What Lululemon can bring to the table to help MIRROR scale into a larger business is more robust marketing channels to lower guest acquisition costs, distribution channels, and access to millions of loyal guests who shop at Lululemon every year. He follows nearly everything in the technology and consumer goods sectors, and is a huge fan of the Peter Lynch investing style. For a monthly premium membership of, say, US$100 a month, you could get discount on Lululemon gear, streaming video lessons, discounted mirror and other hardware, membership to its exclusive experiential stores with meditation and yoga … During the first six months of this year, Mirror averaged 550,000 monthly visitors to its site. Included in the $39/mo MIRROR Membership required with The Mirror purchase. Last year, Lululemon opened experiential stores in Chicago and Minneapolis with locker rooms and other features to deliver engaging experiences for guests. Even before at-home fitness became most people's new normal, Mirror … John covers consumer goods and technology companies for Fool.com. Stock Advisor launched in February of 2002. In Peloton's last quarter, digital subscribers increased 64% annually to 176,600 . You may be wondering why a company that makes yoga pants is buying a company that makes smart mirrors and fitness videos. With the use of a companion app, it streams live and on-demand fitness classes directly onto its reflective surface. The Mirror ($1,495 plus a $39 per month subscription; mirror.co) Note: The prices above reflect the retailer’s listed price at the time of publication. Mirror; Sign In; 0; Membership Terms & Conditions Membership The lululemon membership (the “Membership”) is offered by lululemon athletica canada inc together with its affiliates, including lululemon usa inc. (“lululemon”). The core Mirror product starts at $1,495 and a subscription is $39 per month. Watch Video. Like Peloton, MIRROR already has high engagement with its product and a stream of recurring revenue through subscriptions. Considering the average cost of a monthly gym membership is around $60 , I wanted to know if it was worth the initial investment on top of the monthly fees. In a statement, Lululemon CEO Calvin McDonald said, "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.". A: No, the Mirror isn’t functional without the $39 monthly subscription – billed one year at a time. Last week, lululemon acquired the home fitness startup Mirror for $500 million. Mirror founder Brynn Putnam was a Lululemon ambassador. Returns as of 01/14/2021. We are proud to be a growing global company with locations all around the world, from Vancouver to Shanghai, and places … MIRROR subscription service comes at a price tag of $40 per month and customers have to pay for the MIRROR device around $1,500. That positions Lululemon well, to accelerate the market expansion of its MIRROR product and increase its share of recurring revenue through subscription and membership fees over time. "We look forward to learning from and working with Brynn Putnam and the team at MIRROR to accelerate the growth of personalized in-home fitness.". A brand now owned by the fitness apparel company, lululemon, Mirror sells a $1,500 smart workout machine that aims to bring the advantages of a brick-and-mortar fitness studio into the comfort of your home. The digital membership offers the company's classes on familiar platforms from Roku (NASDAQ:ROKU) to iOS or Android. You guessed it. Instead of combining the capabilities of its different apps, it left their ecosystems fragmented. Cumulative Growth of a $10,000 Investment in Stock Advisor, Why Lululemon Athletica's $500 Million Acquisition of MIRROR Makes Perfect Sense @themotleyfool #stocks $LULU $PTON, Lululemon Athletica Hikes Its 2020 Outlook. Up similar to Peloton, and launched just two years ago now,... A self professed tech nerd and has been successful: it brings people together around what it the. 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