Lululemon downsizes workforce by 100 due to integration of Lululemon Studio.
Lululemon Shakes Things Up with Digital Content Shift
Welcome to the new fitness era at Lululemon. In a bold move, the activewear giant has let go of 100 employees from its Lululemon Studio arm, which includes the at-home fitness platform Mirror, according to a company spokesperson. Most of the laid-off employees were offered ongoing roles to support the future vision of Lululemon Studio.
Lululemon acquired Mirror, a premium fitness technology company known for its smart home gym equipment, for a whopping $500 million in 2020. However, the brand recently introduced Lululemon Studio, its replacement for Mirror's subscription program, back in September 2022.
The layoffs come after the company has diverted its focus from Mirror's hardware. In an effort to drive long-term value and foster deeper connections with customers, Lululemon has been refocusing its strategy from a hardware-centric approach to one that emphasizes digital app-based services.
Initially, Lululemon Studio's paid content tier required the high-end Mirror device, which carries a hefty price tag of at least $995. But in March, Lululemon announced plans to roll out a more affordable workout subscription that didn't require the device.
Mirror, unfortunately, has been a thorn in Lululemon's side, contributing to disappointing hardware sales and impairment charges amounting to $443 million in the earnings report. In response, Lululemon's CEO vowed to focus more on app-based content.
Lululemon isn't the only fitness brand feeling the pinch. In April, at-home fitness equipment brand Tonal announced a significant decline in funding, with its valuation plummeting to between $550 million and $600 million since its initial funding round. Moreover, Tonal's founder stepped down from the CEO position.
Peloton, another well-known player in the market, has been struggling to turn things around following a series of executive changes and layoffs. In May, Peloton relaunched its brand with an expanded range of tiered content memberships and a new content feature to position itself beyond being just a cycling company.
As for Lululemon's future plans for Mirror's hardware, the details remain elusive. However, the company is bolstering its digital workout offerings by growing its content from Xponential Fitness, which owns popular fitness franchises like YogaSix, Club Pilates, and Pure Barre. The partnership also offers discounted rates for subscribers at various fitness studios across the U.S.
Rumors have circulated that Lululemon may even consider selling the Mirror business, but the company remains tight-lipped about such speculation. The shift in strategy comes as many fitness companies grapple with the post-pandemic decline in home workouts and the need to adapt to the changing landscape.
Insights:
- Lululemon Studio is a digital fitness platform offering various immersive workout classes, real-time performance metrics, and an interactive design that turns into a mirror when not in use. The platform streams live and on-demand classes, catering to various fitness levels.
- Lululemon is aiming to enhance user engagement and provide more personalized fitness experiences through AI-driven recommendations. The company is also expected to expand its content offerings and integrate AI tools further.
- Lululemon's plans for Mirror's hardware remain uncertain. However, the shift towards digital content suggests that the company may be phasing out the physical equipment, focusing instead on a streamlined, app-based fitness solution.
- Despite the layoffs, Lululemon continues to pursue technology-driven fitness solutions, such as AI-driven recommendations, to enhance user experiences.
- As businesses adapt to changing fitness trends following the pandemic, Lululemon's move from hardware-centric to digital app-based services represents a significant shift in strategy.
- The financial strain experienced by at-home fitness brands, like Tonal and Peloton, highlights the challenges faced by companies needing to adapt to the post-pandemic decline in home workouts.
- Lululemon's decision to divert its focus from Mirror's hardware and focus on digital content will likely influence other fitness companies to reconsider their business models in response to the shifting landscape.
