lululemon is shrinking its fitness business.
What’s happening: The activewear giant laid off 100 staffers from its Studio division, the business unit that includes its streaming content platform and interactive fitness screen MIRROR.
According to the company, the move was part of a restructuring aimed at fully integrated operations within lululemon. But, the downsizing hints at ongoing challenges stemming from its efforts to scale a digital fitness offering.
For context: On paper, lululemon is accelerating, notching a better-than-expected $2B in its latest quarter, a 24% YoY increase — with marked gains for international sales.
But, further down the page, it’s burying its $500M purchase of MIRROR.
- October 2022: Amid plummeting sales, lululemon launched Studio, initially requiring MIRROR hardware to join.
- April 2023: lululemon noted a $442.7M impairment charge for its underperforming hardware business, announcing plans to pivot away.
- June 2023: After allegedly failing to find an acquirer for MIRROR, lulu debuted an app-only membership for Studio.
Of note, lululemon re-upped its streaming partnership with Xponential Fitness this summer, ensuring continuity for production of Studio content.
Hard Pass
Not new, smart equipment makers have hit a post-pandemic wall.
But, according to new data, content-only fitness apps are topping out on new downloads, with Peloton predicting its first-ever drop in subscribers after unveiling its paywall-gated platform.
However, connected equipment and fitness apps aren’t dead, with forward-thinking operators finding new life in healthcare, AI, and lifestyle coaching.
- European smart equipment makers EGYM and Technogym are aligning with employers and hospitals, encouraging prescribed exercise as medicine.
- Tapping computer vision and AI, a number of brands, from Apple to Tempo, are using data analytics for personalized holistic health coaching.
- As Alo Yoga pursues worldwide expansion, its Moves app is partnering with hospitality like Arlo Hotels, providing guests with free classes and discounted memberships.
Punchline: Smart screens, bikes, and rowers may be struggling because they recreate an exercise experience that already existed. lululemon’s app business reorganization, meanwhile, realigns it behind the brand’s overarching (an undeniably successful) business model: selling a healthy lifestyle.
