Peloton x Lululemon Partnership Takes Flight

Hello dear Monarch readers,

Bailey here 👋🏼

I hope you’re all enjoying your morning as much as I’m SURE all owners of this shirt are:

Why?

Because Peloton and Lululemon announced an official partnership!

Who cares?

Everyone does.*
(*Everyone who is involved with or invested in the Health & Wellness x Tech Sector, and people who wear the aforementioned shirt)

This collaboration marks an important moment for both companies as they look to jointly improve their offerings through pairing Lulu's well-known athletic apparel with Peloton's extensive digital fitness content.

The long-term partnership (5 YEARS) seems like a fantastic strategy as both brands focus on building long term value to attract & retain their customer base.

This move comes as a retrograde-coded, 180 degree switch up, considering Peloton & Lulu were competing against each other until *checks date* YESTERDAY!

Wait… they were competitors?

Yes, and you probably didn’t know about it because Lulu’s product was.. a giant flop.

You may remember some sporadic commercials throughout for super expensive interactive workout mirrors:

Well, to try and gain a competitive advantage, Lulu BOUGHT that company (appropriately named Mirror) for 500 MILLION DOLLARS.

Unfortunately, it didn’t resonate with consumers during the pandemic like the brand hoped, and as the world slowly returned to normalcy / people went back to traditional fitness studios and gyms, the demand for in-home fitness hardware like Mirror significantly decreased.

Despite Lululemon’s efforts to broaden the Mirror’s appeal and reduce its price point, the product sales continued to fall off, rendering the purchase basically worthless.

In other words: Big ✨oopsies✨ on Lulu’s part

enemies ➡️ friends ( ➡️ lovers?)

Once also caught up in a lawsuit over Peloton's own fitness clothing, the companies have now made amends. It seems they both realized the benefits of working together 💘

With that, expect to see a lot more ads with Peloton & Lulu side by side 💫

What happens now?

1. Peloton stops selling their own clothing line

2. Lululemon puts a hold on selling their Mirror fitness device and the associated digital app-only membership.

3. Starting from October 11, Peloton fans will see the introduction of Peloton-branded fitness clothing by Lululemon, which will be available online and at Peloton studios.

4. Lululemon Studio members will be able to enjoy access to thousands of Peloton classes starting from November 1.

Stock implications

Following this week’s announcement, Peloton shares skyrocketed nearly 30%, reflecting the market’s positive reception and anticipated benefits.

The impact on Lululemon’s stock was much less (although still positive), showing a slight 0.8% price increase.

This difference highlights how the market sees Peloton gaining an advantage by partnering with a high-quality athletic apparel brand AND gradually eliminating a direct competitor.

🚨TO END: THIS IS COOL STUFF!!! 🚨

If you liked this article style pls lmk - mixing it up, moving, grooving, shakin’ in my financial literacy boots 🤠

Happy Lions vs. Packers game day to all those who celebrate!!

(specifically targeted towards my lady-lad-Packer-fam-angel-bro-friend-Josie if she’s reading this)

Bailey

Sources:

1. Barrons: Peloton Stock Surges on Lululemon Deal

2. Yahoo Finance: Peloton Stock soars on content partnership with Lululemon

3. CNN: Peloton and Lululemon Partnership

4. Lululemon: The Mirror