3 Reasons Lululemon's Mirror Acquisition Could End Badly
When Lululemon (NASDAQ: LULU) announced it was acquiring Mirror, the virtual workout start-up, some investors might have been reminded of Under Armour's (NYSE: UAA) (NYSE: UA) attempt to expand into the connected fitness space. Given Under Armour's recent struggles, it's difficult to remember that the company used to report massive revenue growth. The company seemed to be a perfect fit to integrate fitness apps, data collection, and fitness gear -- but its fortunes faded as management invested time and resources into a business it didn't seem to understand. If Lululemon's acquisition pulls resources away from the company's fabrics business, it could similarly spell trouble for the company's growth trajectory.
With gyms and many workout classes worldwide being put on pause or turning virtual, working out at home has never been more popular. Mirror offers a full-length mirror that doubles as a semi-transparent video screen. Combined with a $39 monthly subscription, Mirror allows users to access many different types of video workouts led by individual trainers overlaid on the reflective screen. Mirror's product doesn't look like a piece of workout equipment, yet it offers a similar experience to a high-end fitness class. Lululemon's CEO Calvin McDonald spelled out the argument for the acquisition: "We also believe that at-home virtual workouts will be an additive component of sweat regimens well into the future even as studios reopen."
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Source Fool.com