- At an analyst day on Wednesday, Lululemon announced plans for its Mirror fitness technology.
- This year, Lululemon plans to launch Lululemon Studio, a membership plan for its Mirror device.
- Lululemon acquired Mirror in 2020 for $453 million. Insiders have been skeptical of the technology.
Lululemon on Wednesday announced plans for a new membership program and additional fitness programming for its Mirror connected-fitness offering.
The company announced the plans at an analyst day in New York City, where CEO Calvin McDonald said the company expected to double its revenue to $12.5 billion by 2026 by doubling its men’s business, doubling its digital business, and quadrupling its international business.
Lululemon almost doubled its business from $3.3 billion in annual sales since its last investor day in April 2019, but Mirror has been a source of frustration for analysts.
Lululemon acquired Mirror in July 2020 for $453 million. At the time, company insiders were skeptical about the technology, calling it “buggy” and wondering how it fit into Lululemon’s long-term growth strategy. Analysts worried about competition in the connected-fitness space.
The analyst-day presentation tried to address some of these concerns.
This year, Lululemon plans to launch Lululemon Studio, a membership program that will replace the standard $39 a month Mirror membership. Lululemon Studio members are set to gain access to fitness programming, discounts on live classes, and early access to Lululemon products, among other benefits.
Lululemon intends to partner with health clubs and studios, including Y7, AARMY, Dogpound, Miami Life Center, and Forward Space, to give members access to more fitness programming on a Mirror.
A Lululemon Studio membership would also cost $39 a month and give members access to 10,000 classes in 50 fitness categories, said Mike Aragon, Mirror’s CEO and a former
executive who started in January.
“Our goal is to build a platform that connects Lululemon guests, who want to live healthier lives,” he said. “The goal is simple: Be the go-to platform for fitness and wellness.”
Company executives said they wanted to use Lululemon Studio to gather more data on customers in order to more effectively market products.
Later this year, Lululemon plans to offer a version of the Lululemon Studio that can be used in absence of a Mirror — on a smart TV, iPad, or mobile phone.
The change may solve the problem of marketing a company with a different name.
“Putting our efforts together makes one strong, connected community,” said Nikki Neuburger, Lululemon’s chief brand officer.
This year, Lululemon also plans to launch a free membership program, similar to a traditional company loyalty plan.
The company expects 80% of its customers to become members within the next five years.
Lululemon doesn’t break out financials for Mirror. On the company’s third-quarter earnings call last year, McDonald said he expected Mirror to generate $125 million to $130 million in 2021 revenue.
In a note to investors this week, John Kernan, an analyst at Cowen, estimated that Mirror would generate $150 million in revenue this year.
But it’s unclear if Mirror is profitable.
“We continue to believe that Mirror will contribute profitability overall to our financials,” said Meghan Frank, Lululemon’s chief financial officer, during the Q&A portion of the analyst meeting.
Analysts offered mixed comments on Lululemon’s new Mirror strategy.
Kernan said Mirror could be a “surprise to the upside long term.”
“Mirror can be at the intersection of
media, tech, fitness, fashion, and digital community,” he wrote.
Randal Konik, an analyst at Jefferies, thought the opposite.
“We’d still rather the company get rid of it,” he wrote in a note to investors. Konik added that it was a “great analyst day,” but he worried about Lululemon’s ability to expand the Mirror franchise as more people returned to gyms.
Lululemon exceeded the financial goals announced at its last analyst day three years ago.
“We’re building an iconic global brand,” Neuburger said. “The runway is significant. We’re early innings.”
But shares are down since the analyst day. Wall Street may have expected an even rosier outlook.