Lululemon announced Monday that it is buying home fitness startup Mirror for $500 million.
While some analysts were skeptical of whether this was a good use of cash reserves during the pandemic, others say it positions the brand well for the future.
In the short term, it provides Lululemon with a new revenue stream and access to the booming home fitness market and in the long-term the possibility to sell its apparel through a new innovative platform.
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Lululemon announced Monday that it is buying Mirror for $500 million – the home fitness startup behind the $1,500 mirror that enables customers to stream workout classes from their home.
Some analysts and experts questioned whether this purchase was a good use of its cash reserves during the pandemic. Like other clothing brands, Lululemon faces pressure on sales while stores remain closed. Other analysts are applauding the deal and say it puts Lululemon in a position of strength long-term.
“I think it is an incredibly interesting, insightful, and relevant move for both parties,” Greg Kahn, CEO of GK Digital Ventures, which advises companies on technology and digital transformation, said in a call with Business Insider on Tuesday.
“It really puts Lululemon in a new light,” he said. “It is almost future-proofing the company and saying: ‘we are moving beyond our traditional commerce structure.'”
The immediate benefit of this acquisition is that it provides Lululemon with access to a new revenue stream, which is subscription-based, and that could be crucial for its business as brick and mortar sales continue to come under threat during the pandemic.
It also gives Luluemon the chance to put its products in front of Mirror customers by outfitting the instructors in Lululemon clothing.
But the long-term opportunities are even more exciting, Kahn said.
“For years we …read more
Source:: Business Insider