Lululemon is contemplating promoting Mirror to Hydrow

A Lululemon sign is seen at a mall in San Diego, California, November 23, 2022.

Mike Blake | Reuters

Lululemon is looking to sell its home fitness business, Mirror, and has approached competitor Hydrow as a potential buyer, CNBC learned.

Several parties have reached out to Hydrow to gauge its interest in Mirror, said industry sources, who declined to be named because the talks are private.

It’s not clear if Hydrow, a private startup that sells connected rowing machines, is interested in a deal. The company said it does not comment on rumors or speculation.

A company spokesman for Lululemon said the same thing.

“As previously announced, we are shifting the focus of lululemon Studio from a hardware-centric offering to one that will also focus on digital app-based services in the future,” the spokesperson said. “This work is ongoing and our strategy will allow us to create long-term value and build a larger community of guests with a deeper connection to lululemon.”

Lululemon announced it would acquire Mirror for $500 million at the height of the at-home fitness bonanza in June 2020. It was a bet that even after the Covid pandemic ended and gyms reopened, people would continue to work out at home.

At the time of the acquisition, the fitness startup was offering live weekly classes that users could follow with its wall-mounted mirror device. It also offered on-demand workouts and one-on-one workouts.

The segment has since been rebranded as lululemon Studio, but it’s weighing on the fitness apparel company’s balance sheet.

In the three months ended Jan. 29, the company said it took $443 million in Mirror-related impairments and told investors that hardware sales had fallen short of expectations. Lululemon’s shares are up about 16% so far this year.

The Mirror product, which once retailed for $1,495, now retails for just $995 and requires a $39 monthly subscription fee.

Lululemon acknowledged that the home fitness market is under pressure. Similar to Peloton, they’ve started moving the segment away from the hardware focus.

In March, Lululemon announced it would launch a new digital fitness app this summer, allowing consumers to access digital fitness content without hardware and at a lower price than the current subscription package.

“Since our acquisition, home fitness has been a challenge. While members love our content, hardware sales have not lived up to our expectations. … As we continue to invest prudently in this business, we are evolving the model to move away from being hardware-centric — just to offer content through a digital and app-based solution as well,” Lululemon CEO Calvin McDonald told investors a conference call.

“We view lululemon Studio the same way we view any innovation. We test, we learn and evolve as needed. While the acquisition is not going fully as originally intended, we are in a much better position in our understanding of community and our new membership program as a result.”

Bloomberg News initially reported that Lululemon was considering selling Mirror.

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