Lululemon explores sale of Mirror to Hydrow

Lululemon is looking to sell its at-home fitness business Mirror and has approached competitor Hydrow as a potential buyer, CNBC has learned. 

Multiple parties have reached out to Hydrow to gauge its interest in Mirror, said industry sources, who declined to be named because the talks are private. 

It’s not clear whether Hydrow, a private startup that sells connected rowing machines, is interested in moving forward with a deal. The company declined to comment. 

A Lululemon company spokesperson said they “don’t comment on rumors or speculation.”

“As previously announced, we are shifting the focus of lululemon Studio from a hardware-centric offering to one that is also focused on digital app-based services going forward,” the spokesperson said. “This work is underway, and our strategy will enable us to create long-term value and build a larger community of guests with a deeper connection to lululemon.”

Lululemon announced it would acquire Mirror for $500 million at the height of the at-home fitness bonanza in June 2020. It was a bet that people would continue to exercise at home, even after the Covid pandemic ended and gyms reopened. 

At the time of the acquisition, the fitness startup offered live weekly classes that users could follow along with using its wall-mounted mirror device. It also offered on-demand workouts and one-on-one personal training sessions. 

The segment has since rebranded as lululemon Studio but has been weighing on the fitness apparel company’s balance sheet. 

During the three months ended Jan. 29, the company said it took $443 million in impairment charges related to Mirror and told investors hardware sales have come in below expectations. Shares of Lululemon are up about 16% so far this year.

The Mirror product, which once retailed for $1,495, is now sold for as low as $995 and requires a $39 monthly subscription charge. 

Lululemon acknowledged the at-home fitness market has been under pressure. Similar to Peloton, it has begun pivoting the segment away from being hardware-focused. 

In March, Lululemon announced it will launch a new digital fitness app in the summer that will allow consumers to access digital fitness content without hardware and at a lower price point than its current subscription package.

“Since our acquisition, the at-home fitness space has been challenging. While members love our content, hardware sales did not match our expectations. … As we continue to invest prudently in this business, we are evolving the model from being focused on hardware-only to offering content through a digital and app-based solution as well,” Lululemon CEO Calvin McDonald told investors on an earnings call. 

“We view lululemon Studio in the same way we view any innovation. We test, we learn, and we evolve as necessary. Although the acquisition is not fully materialized as originally intended, we are in a much better position in our understanding of community and our new membership program as a result.” 

Bloomberg News initially reported that Lululemon was exploring a sale of Mirror.