- As Lululemon comes under pressure to share more information about Mirror's performance, founder Brynn Putnam is stepping down from the CEO role at the home fitness platform, according to a memo to employees obtained by Retail Dive.
- The memo, sent by Lululemon CEO Calvin McDonald and Putnam, noted that Putnam would stay on at Lululemon as an adviser to Mirror until July 2022, "to ensure a smooth transition as we identify the next CEO." The search for a new CEO is now underway.
- In the interim, three Mirror executives will lead the business: Head of Customer Tess Hales, Head of Operations Olivia Lange and Chief Technology Officer Kristie D'Ambrosio-Correll. All will report to McDonald.
Since Lululemon's $500 million Mirror acquisition in June last year, the fitness platform has sparked intrigue and some frustration as analysts try to understand the impact it will have on Lululemon's core business.
"While the 2020 Mirror acquisition was initially received positively by the market, it appears sentiment has cooled over time as management has intentionally limited disclosure around the business' performance," Morgan Stanley analysts led by Kimberly Greenberger said in emailed comments after Lululemon's latest earnings report.
Greenberger noted that while Lululemon confirmed Mirror was not profitable in its Q2 report, executives did not share a path to profitability for the acquisition. "In our view, given limited disclosure, the Mirror acquisition has seemingly introduced noise into an otherwise clean equity story," Greenberger wrote.
Lululemon executives, on the other hand, still see much potential in the home fitness business. Mirror is now in 150 Lululemon stores, with that number expected to grow to 200 by the holidays. An expansion into Canada is also close on the horizon, and Lululemon has opened a second production studio for Mirror, which doubles the number of classes the platform can offer.
At the beginning of this year, the athletics retailer said Mirror brought in $170 million, and CEO Calvin McDonald said at the time that number was expected to grow by 50% to 65% this year.
"We are playing the long game," McDonald said of Mirror's growth plan in September.
However, even Lululemon is aware of some of the challenges with the business. McDonald said in the retailer's most recent earnings report that the company was carefully watching the rising customer acquisition costs for Mirror as it tries to gain broader awareness.
The memo noted that, at the time of the acquisition, "it was important that we could all benefit from Brynn's leadership and vision as we came together." A year in, however, the company is hoping "to find the right candidate to drive the brand's next phase of growth."
Clarification: This piece has been updated to clarify the reason behind Putnam's departure and who authored the memo.