Peloton and Lululemon Join Forces

Peloton and Lululemon have recently announced a five-year partnership. As part of this collaboration, Peloton’s content will be integrated into Lululemon’s exercise app. Additionally, Lululemon will become Peloton’s primary athletic apparel partner, and a select number of Peloton’s instructors will serve as ambassadors for the apparel retailer.

The specific terms of the deal, including revenue sharing, have not been disclosed.

Following the announcement, Peloton’s stock experienced a more than 15% increase in extended trading. In contrast, Lululemon’s shares remained flat during after-hours trading. Lululemon currently boasts a market capitalization of approximately $48 billion, significantly higher than Peloton’s $1.7 billion.

Impact on Mirror and Connected Fitness Products

Lululemon also revealed its decision to discontinue selling Mirror, a product that enables users to stream workout classes, by the end of the year. The company had explored selling Mirror due to below-expectation sales, leading to a $443 million impairment charge. Peloton’s content will now be accessible through Mirror, although the future of the device and potential divestiture of the division remain uncertain.

Peloton, on the other hand, has experienced a decline in sales for its connected fitness products following the peak of the pandemic. Consequently, the company has shifted its focus towards content as its primary value proposition. The partnership with Lululemon marks the first time Peloton will share its coveted content with another company, apart from a smaller collaboration with Delta Air Lines offering meditation and movement classes for travelers.

Lululemon’s App and Peloton’s Member Count

Lululemon’s app currently boasts approximately 13 million members, nearly double the total global member count of Peloton, which stands at around 7 million. However, under the agreement, Peloton will not have access to Lululemon’s members consuming its content.

Co-founder’s Departure and Future Partnerships

This partnership announcement comes shortly after Peloton’s co-founder and Chief Product Officer Tom Cortese announced his departure from the company. In a previous interview, Peloton’s Chief Content Officer Jenn Cotter mentioned that while partnerships were not off the table, there was no immediate need for them. Cortese also emphasized the importance of maintaining a direct relationship with Peloton’s members.

Further details about the partnership and its implications are yet to be revealed.