Lululemon has approached Hydrow about a possible sale of Mirror

A Lululemon banner is seen in a San Diego shopping mall, California, on November 23, 2022.

Reuters

CNBC learned that Lululemon has approached Hydrow, a competitor in the fitness industry, as a possible buyer for its Mirror at-home business.

Sources in the industry, who declined to name themselves because of the private nature of these discussions, say that multiple parties have contacted Hydrow to gauge their interest in Mirror.

Hydrow, a startup selling connected rowing machines that is a privately owned company, has not made it clear if they are interested in a potential deal. The company stated that it does not comment on rumors and speculation.

A spokesperson for Lululemon confirmed the same.

The spokesperson stated that "as we have previously announced, lululemon will be shifting its focus from a hardware-centric service to one which is focused on digital apps-based services moving forward." This work is already underway. Our strategy will allow us to build a community of guests who have a stronger connection to lululemon.

Lululemon has announced that it will acquire Mirror in June 2020, at the peak of the at-home exercise boom. The bet was that people would still exercise at home after the Covid epidemic ended and gyms opened again.

The fitness startup was offering live classes every week that users could follow using its mirror-mounted device. It also offered personal training and on-demand workouts.

The segment, which has now been rebranded lululemon studio, has weighed on the balance sheet of the fitness apparel company.

The company reported that during the three-month period ended January 29, it had taken $443 million of impairment charges related Mirror, and informed investors that hardware sales were below expectations. Lululemon shares are up 16% this year.

Mirror, which was once sold at $1,495, can now be purchased for $995 with a $39 subscription fee per month.

Lululemon has acknowledged that the market for at-home fitness is under pressure. It has started to pivot the segment in a similar way as Peloton.

Lululemon announced in March that it would launch a digital fitness app this summer. The app will enable consumers to access digital content for fitness without the need for hardware, and at a cheaper price than their current subscription package.

Since our acquisition, the home fitness market has been challenging. Hardware sales were not as high as we had hoped, even though our members loved our content. We are changing our model to offer content via digital and app-based solutions as we continue to prudently invest in this business," Lululemon's CEO Calvin McDonald said on an earnings call.

"We see lululemon studio in the same light as we do any other innovation. We test, learn and evolve when necessary. "Although the acquisition did not materialize as planned, it has given us a better understanding of our community and our new member program."

Bloomberg News reported initially that Lululemon had been exploring the sale of Mirror.