In its latest earnings report, lululemon’s activewear sales exceeded analyst estimates. But, MIRROR, the company’s connected fitness brand, is weighing it down.
By the Numbers
- lululemon’s net revenue reached $1.5B, a 30% increase YoY.
- The core women’s business ticked up 25%.
- Two strategic priorities, menswear and international sales, were up 44% and 40%, respectively.
A strong showing, lululemon boosted its full-year forecast with CEO Calvin McDonald noting that the brand expects to surpass $6B in annual revenue for the first time.
Not so fast… While lululemon’s apparel outperformed, its home workout device suffered a setback.
- 2020: lulu paid $500M to acquire MIRROR, with the connected fitness brand earning $170M in revenue.
- 2021: Heading into this year, MIRROR’s revenue target was set at $250–275M.
Cutting MIRROR’s 2021 sales figure in half, lululemon now expects the equipment maker to bring in $125M to $130M — with McDonald adding:
“As you know, 2021 has been a challenging year for digital fitness… We have seen increasing pressures on customer acquisition costs that are impacting the entire industry.”
Home workout hangover. Bolstered by the pandemic, connected fitness boomed. But, as gyms reopen and competition across the category grows, consumers and brands are trying to find their footing. For lululemon, the synergies made the MIRROR acquisition too good to pass up. Now, they’re likely wondering if the deal was too good to be true.