health and fitness

Lululemon Expands Digital Workouts

Lululemon wants its fans to get sweatier. The retailer is expanding its partnership with Xponential Fitness, which owns such boutique fitness brands as Pure Barre, Cycle Bar, Row House, YogaSix and Rumble.

The company already offers about 10,000 classes through Lululemon Studio, using Mirror, the company's connected fitness device. Those classes, including many on-demand and live-streaming classes from Xponential Fitness, are priced at $39 per month. But this announcement coincides with the launch of Lululemon's digital fitness app, priced at $12.99 a month that  requires no hardware.

Both approaches closely resemble offers from rival Peloton.

Lululemon, which first teamed up with Xponential last October, says the move makes sense as customers look for more -- and more varied -- hybrid workout options.



Membership in Lululemon Studio costs $39 per month, offering some 10,000 classes. This new partnership allows members to receive discounted lessons at Xponential's 2,500 brick-and-mortar locations.

The announcement comes shortly after Lululemon's first-quarter earnings announcement, showcasing a 24% jump in revenue, which reached $2 billion, up from $1.61 billion in the first quarter of its last fiscal year. That includes a 17% gain in North America and a 60% jump internationally. Sales in D2C channels climbed 16%.

Net income surged to $290.4 million, up from $190 million in the comparable period last year.

The results beat expectations, especially as many retailers and apparel brands report declining sales.

Lululemon's gains are "a clear indication of a brand that continues to resonate well with an expanding base of core consumers," writes Brian Nagel, an analyst who follows the company for Oppenheimer & Co. The company's management team and business model are "navigating well a choppy, uncertain consumer backdrop," Nagel adds.

On a conference call discussing results, Lululemon's chief executive officer, Calvin McDonald, told investors the company isn't releasing sales results from Lululemon Studio. He did explain that the company hopes the Studio members will expand the retailer's total audience and begin to mesh with its Lululemon essential membership program.

After six months, that program now has eight million members. "We are excited about Essential memberships -- how it's going to support our community, fit into Lululemon Studio, [show] the benefit of sweat and other means to interact with our guests," McDonald said.

In previous calls, the company has said it ultimately expects 80% of its customers to become loyalty members.

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