Peloton shares rise due to partnership with Lululemon

  • Peloton and Lululemon announce five-year strategic partnership.
  • Peloton will develop digital fitness content for Lululemon, while Lululemon will become Peloton’s primary athletic apparel provider.
  • Lululemon plans to stop selling its Studio Mirror product before the end of the year.

Jen Van Santvoord rides her Peloton exercise bike at her home in San Anselmo, California.

Ezra Shaw getty images

Peloton and Lululemon are joining forces.

The two companies announced a five-year partnership on Wednesday, under which Peloton will become the exclusive fitness content provider for Lululemon’s exercise app. Lululemon will become Peloton’s primary athletic apparel partner, and select Peloton trainers will become ambassadors for the apparel retailer.

Peloton’s stock jumped more than 10% in extended trading on the news. Shares of Lululemon — which has a market capitalization of about $48 billion compared to Peloton’s $1.7 billion — were flat in after-hours trading.

As part of the announcement, Lululemon said it plans to discontinue sales of its Studio Mirror, which allows users to stream workout classes, by the end of the year. CNBC previously reported that the company was exploring the possibility of selling the product and had approached competitor Hydro as a potential buyer.

During the three months ended January 29, Lululemon took a $443 million impairment charge related to Mirror. In a March call with investors it said hardware sales were lower than expected.

Following the announcement, the fate of Mirror, and whether or not the product would be sold, was unclear.

The news comes a day after Peloton announced co-founder and chief product officer Tom Cortez is leaving the company. Peloton is changing its strategy and branding under CEO Barry McCarthy to shift its focus to its apps and content rather than its expensive exercise equipment.

This is breaking news. Please check back for updates.

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