Mirror acquisition leads Lululemon shares to rise in after-hours trading

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Shares of Lululemon are up more than 3 percent in after-hours trading Monday on news of the athletic apparel company's plans to acquire home fitness startup Mirror for $500 million.

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LULULULULEMON ATHLETICA INC.294.35+4.82+1.66%

“In 2019, we detailed our vision to be the experiential brand that ignites a community of people living the sweatlife through sweat, grow and connect," Lululemon CEO Calvin McDonald said in a press release. "The acquisition of MIRROR is an exciting opportunity to build upon that vision, enhance our digital and interactive capabilities, and deepen our roots in the sweatlife."

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Mirror, which launched in 2018, offers weekly live classes, thousands of on-demand workouts and one-on-one personal training sessions through its online platform.

“We are thrilled to officially become a part of the lululemon family, Mirror founder and CEO Brynn Putnam added. "As part of lululemon, MIRROR can further strengthen its position and accelerate its growth by leveraging lululemon’s deep relationships with its guests, ambassadors and communities, as well as the company’s infrastructure, including its store network and e-commerce channels, to acquire new users.”

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The deal builds on a content partnership between the two companies that began back in mid-2019, which includes sweat and meditation classes on the Mirror platform taught by Lululemon's Global Ambassadors.

The purchase price will be paid from Lululemon's primary sources of liquidity, including over $800 million in cash, its existing $400 million revolving credit facility, and a new one-year, $300 million revolving credit facility.

Following the completion of the transaction, which is expected later this year, Mirror will operate as a standalone company within Lululemon.

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Lululemon is positioning itself to further expand into the digital fitness and athleisure market to compete with rivals like Peloton and Nike as home fitness has increased in demand due to lockdowns triggered by the coronavirus pandemic.

Lululemon's sales have taken a hit from the pandemic, with a reported $28.6 million in net income in the last quarter compared to $96.6 million a year ago. Revenue fell 17 percent to $651.96 million from $782.3 million a year ago.

According to ResearchAndMarkets.com’s “Global Athleisure Market report, the athleisure market is projected to grow by $80.74 billion from 2020 to 2024.

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