lululemon and Peloton to Team up

lululemon to bring Peloton workouts to Studio App Members

Peloton and lululemon, former competitors, are now teaming up together. This new partnership is a big win for lululemon as their apparel sales to Peloton members over the next five years could make more in revenues than its lost investment of $500 million in the Mirror.

Both fitness companies announced a five-year “strategic global partnership,” which involves lululemon ending its Mirror fitness device sales and Peloton agreeing to end its private-label fitness clothing. The financial terms of the deal were not disclosed. 

We Estimate Peloton apparel sales for lululemon could reach $200 million a year, nearly $1 billion in new revenue over five years, with select Peloton instructors becoming ambassadors for the apparel retailer, initially they are Erik Jäger, Hannah Frankson, Adrian Williams, and Chelsea Robert.

Peloton-lululemon team brand ambassadors

A Strategic Partnership

lululemon will bring Peloton workouts to its 13 million Studio members. According to the agreement details, Peloton will not have access to these members.

lululemon members are more than double the Peloton app subscribers of approximately 6 million members. The agreement will be a content-only deal, with the Peloton workouts available to Studio App members, including on-demand content previously recorded by lululemon.

Peloton Content Distribution

This partnership with lululemon will mark the first time Peloton has shared its prized content with another company, aside from an earlier smaller partnership with Delta Air Lines that offers meditation and movement classes for fliers.

Beginning next month, lululemon will manufacture Peloton-branded fitness clothing, ending Peloton’s two-year-old attempt at producing its own fitness clothing in-house as a lululemon rival. The clothing line sparked a lawsuit between the companies with lululemon accusing Peloton of creating “copycat products.” The two companies settled the lawsuit last year.

The new clothing line will be available online and sold direct at Peloton stores and its studios beginning October 11.

In return, lululemon will stop selling its $995 Mirror fitness device by the end of the year and soon end producing its own Peloton-like fitness classes. Beginning October 1, Peloton’s streaming fitness classes will be available in the “lululemon Studio” app for its subscribers. lululemon relaunched the app about a year ago as a Peloton rival, giving subscribers streamed classes from trendy fitness studios like celebrity favorites AARMY and Dogpound.

lululemon Financial Benefits

The Mirror has been a money loser for lululemon since its purchase during the peak of the Covid-19 pandemic in 2020. The $500 Mirror million acquisition was written off, earlier this year and forced lululemon to search for strategic alternatives to the device. An effort in 2022 cutting its price to broaden its appeal with new fitness classes seemingly failed to generate enough interest from consumers, with many heading back to the gym as the concerns began to wind down.

lululemon said Wednesday it laid off about 120 employees who worked on Mirror as part of the move. “We will support those impacted through the transition,” a spokesman said.

Peloton Benefits

“By bringing together the best in fitness content with the best in athletic apparel, we’ll give our communities one-of-a-kind experiences and special content that will inspire them to achieve their goals,” said Dion Camp Sanders, Peloton’s chief emerging business officer, in a press release.

Peloton might gain some new eyeballs, but this seems to diminish the “special” Peloton brand as it becomes a content producer for the already over-saturated streaming content area. Not financially strong enough, to be profitable on its own Peloton will now have to compete in the tough streaming world that is currently on a war to lower margins to zero just to compete. This does not seem like a “Win” for Peloton, especially as the new content watchers remain the property of lululemon.

Analyst Thoughts

The partnership stems from both companies realizing that “dabbling in areas outside of their core competencies was not yielding results,” according to Neil Saunders, a retail analyst for GlobalData.

“Peloton’s push into apparel was a failure as the selection was weak and looked incredibly lackluster in stores. The company was not doing sufficient volume to justify the operation,” Saunders told CNN. “lululemon’s Mirror device was a flop because it was too expensive and too complex.”

“The partnership beneficial for both firms, particularly Peloton, arguably needs it more as it is still on very shaky ground financially,” he added.

Shares of Peloton (PTON) soared 14% in premarket trading on Thursday, Sept. 28, while lululemon (LULU) stock was flat.

Final Thoughts

lululemon is the larger partner in this arrangement, and it is hard to see the benefits for Peloton beyond a shot of cash (albeit badly needed). The biggest winners may be the Peloton instructors, who are selected to be brand ambassadors for lululemon.

The exposure could push them into the world of Cody, Matt, Alex, and Robin, who all have lucrative personal brands. We are rooting for Ash Pryor, a truly inspiring personality who brings inclusiveness to indoor rowing and can benefit many people by introducing them to the fitness benefits of rowing.

Read Learning to Row – My 20-minute a day, 1-year Journey, featuring, iFit trainer Kevin Scott, who loves to bring the fitness benefits of indoor rowing in picturesque French Polynesia.