To understand how Lululemon Athletica has successfully built an activewear empire while bucking the turmoil rocking most apparel makers, it’s instructive to assess how the company handled the biggest disappointment in its history.
With Americans forced to exercise from home in 2020, Lululemon purchased the smart fitness platform Mirror for $500 million, hoping to get in on the at-home fitness craze propelling companies like Peloton and Tonal. In addition to a new line of business, the deal's rationale was to drive more buyers of Lululemon clothing. It was the apparel company's first major M&A transaction—but ultimately troubled. Once the pandemic receded, Americans flocked back to their gyms and boutique fitness studios, leaving the digital fitness startup struggling to attract users. Since the acquisition, Lululemon has taken write-downs almost equal to Mirror's price tag, meaning Mirror is now nearly worthless in accounting terms. (Media reports have said Lululemon is looking to sell Mirror. The company declined to comment.)
