Lululemon Studio Lay Offs Reflect Fitness Shift Away From Mirror

Sales at athleisure and fitness giant Lululemon Athletica
LULU
might be booming but there is a crack in the Mirror.

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Lululemon Studio Replaces Mirror Lululemon App-Based Strategy

Reflecting the plummeting popularity of at-home fitness hardware post-pandemic, the company is reportedly looking to offload the premium fitness technology device that, along with Peloton, was a darling of the lockdown period.

As part of a strategy shift towards digital content, Lululemon has laid off 100 employees from its Lululemon Studio business, which includes Mirror, and has integrated the division into the main business.

While a majority of Lululemon Studio employees have been offered ongoing roles at Lululemon according to the company, it is a far cry from its ambitions for Mirror when it was acquired for $500 million in 2020, initially as a stand-alone company.

But the popularity of at-home fitness equipment has flagged since the pandemic, as fitness fans have returned to outdoors and studio activities.

Although Lululemon has declined to comment on reports that it has been seeking to offload Mirror once and for all, recent reports in the New York Post suggested that Lululemon had failed to find a buyer for Mirror despite slashing the price by nearly 90% after working with an adviser to explore a sale of the business.

Now renamed Lululemon Connect, it has underperformed since being acquired and on March 29 Lululemon absorbed after-tax impairment and other charges totalling $442.7 million against fourth-quarter earnings related to Mirror as the device’s sales over the holiday season fell below expectations.

The New York Post reported that, according to a recent Lululemon filing, it now values the Mirror business at just $58 million, not even 12% of its acquisition price.

The impairment charges in the fourth quarter arrived as Lululemon shifted Mirror away from the hardware-centric business it bought in 2020 to focus on an app-based model.

Lululemon Studio Replaces Mirror

Lululemon launched Lululemon Studio as a replacement for Mirror’s subscription program in September 2022 and the layoffs at Luluelmon Studio come after the company has continued to shift its emphasis away from Mirror’s hardware.

“As part of the evolution of Lululemon Studio, we made the decision to restructure the business and fully integrate it within lululemon,” a company spokesperson said.

“This shift, as well as our evolved strategy from a hardware-centric offering to one that is also focused on digital app-based services, enables Lululemon to better drive long-term value through our Membership offerings and create deeper connections with our community of guests.”

Although Lululemon Studio’s paid content tier initially required the device, which currently costs a minimum of $995, down from $1,500 on acquisition, the company has also announced in that it plans to roll out a cheaper fitness service that does not require Mirror’s device, but still offered the same content.

Lululemon App-Based Strategy

After Lululemon’s CEO announced it was to focus its strategy more on app-based content, the company announced in early June that it would expand its digital workouts by expandng its content from Xponential Fitness, which owns fitness franchises like YogaSix, Club Pilates and Pure Barre.

In addition, the new partnership includes discounted rates for subscribers at AKT, Pure Barre, Rumble and YogaSix sites across the U.S.

And Lululemon’s is not alone in struggling to grapple with the downfall of home-workout subscription models.

In April, Fitness brand Tonal announced it had raised funding of $130 million through existing investors, sharply down from its previous raise of $250 million in March 2021 at a then $1.6 billion valuation.

Now the company’s valuation is between $550-$600 million according to estimates from The Wall Street Journal, while Tonal’s founder, Aly Orady, stepped down as CEO to become chief technology officer.

However, the biggest shift has come at home fitness giant Peloton, which has been attempting to turn the business around and relaunched its brand as an ‘exercise anywhere’ offer with an expanded range of tiered content memberships in May.

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