(Reuters) - Lululemon Athletica Inc (LULU.O) said on Monday it would buy home fitness company Mirror for $500 million, as the high-end yogawear maker looks to cash in on booming demand for home workout classes spurred by coronavirus lockdowns.
The closure of gyms and fitness clubs due to the COVID-19 pandemic has led many shut-in Americans to splurge on home-workout equipment and subscriptions, boosting sales of companies such as Mirror and Peloton Interactive Inc (PTON.O).
New York-based Mirror, which launched in 2018, is set to reach over $100 million in revenue this year through sales of its about $1,500 mirror-like video monitors and monthly subscriptions for live workout classes, Lululemon said.
Lululemon has also maintained a much stronger financial position compared with other apparel brands during the coronavirus crisis, as consumers rushed to buy comfortable clothing for their indoor workouts.
The deal, which is set to close in the next one to two weeks, gives Lululemon a new revenue stream, as well as an opportunity to more deeply integrate its yoga pants, sports bras and leggings into home workout classes, in front of the eyes of its prime affluent millennial customer base.
The Vancouver, British Columbia-based company’s shares, which have gained over 27% this year, rose 3.6% in extended trading.
The company said Mirror will operate as a standalone unit, with founder Brynn Putnam continuing to serve as chief executive officer. Lululemon plans to fund the deal through a combination of cash on hand and existing credit lines.
Shares of Peloton fell 2% after the news of the deal.
Reporting by Uday Sampath in Bengaluru; Editing by Aditya Soni