A woman wearing a mask walks past a boarded up Lululemon shop in New York, the US, June 23 2020. Picture: ANGELA WEISS/AFP
A woman wearing a mask walks past a boarded up Lululemon shop in New York, the US, June 23 2020. Picture: ANGELA WEISS/AFP

New York — Yoga-pants retailer Lululemon Athletica agreed to buy Mirror, a maker of in-home fitness equipment, for $500m, broadening a partnership that began in 2019 as exercise increasingly moves away from traditional gyms.

Mirror will operate as a stand alone company within Lululemon and retain its chief executive following completion of the deal, the companies said. The purchase will be paid from Lululemon’s primary sources of liquidity, including $800m in cash and $700m in credit facilities.

The deal furthers Lululemon’s shift to become a more experience-based company and beyond its roots as a traditional retailer. While the Vancouver-based company has always leant into health — with many of its existing stores offering free running clubs or yoga classes — last summer it moved to monetise its workout offerings by opening a Chicago store with a gym.

Home-fitness products such as Peloton bikes and Mirror’s wall-mounted device have gained in popularity as the coronavirus pandemic has shuttered gyms. New York-based Mirror, known for its ubiquitous subway ads, also offers customers live classes and on-demand workouts, mimicking what they might have once paid a personal trainer at the gym to oversee.

Lululemon shares rose as much as 4.1% in aftermarket trading. Shares of rival home-fitness company Peloton Interactive fell as much as 4.6% before paring losses.

The deal is expected to close in the second quarter of the fiscal year. Lululemon took a small stake in Mirror in 2019.

Lululemon CEO Calvin McDonald said on CNBC that the acquisition was not motivated by boosting his company’s apparel sales but by the home gym product’s own potential. He said Mirror will be profitable as soon as next year and while it’s now only available in the US, Lululemon plans to offer Mirror internationally.

Bloomberg