Lululemon is undergoing another round of layoffs this week in the wake of its new partnership with Peloton, the company confirmed to FN.
Under a new five-year deal announced this week, Peloton became the official digital fitness content provider for Lululemon Studio All-Access Members and Lululemon became the primary athletic apparel provider for Peloton. Lululemon also announced that it will discontinue sales of its Mirror device by the end of the year as it turns to Peloton to become its exclusive provider of digital fitness content.
The athleisure brand said the cuts will impact 120 employees across the Lululemon Studio team.
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“As we considered the Peloton partnership, the most difficult decision was the direct impact the evolution will have on approximately 120 of our people who support Lululemon Studio today,” Lululemon said in a statement on Thursday evening. “True to our company values, we will support those impacted through the transition. We deeply appreciate their contributions and recognize how difficult this announcement is for the team.”
The cuts mark the second round of layoffs for the athleisure brand since July, when Lululemon laid off about 100 employees amid a restructure in its Studio business. At the time, Lululemon said the cuts stemmed from Lululemon’s decision to “fully integrate” the recently launched fitness platform within Lululemon. At the time, a majority of impacted employees were offered other roles in the company, a spokesperson said.
Lululemon acquired Mirror, the home fitness startup that sells a wall-mounted machine for streaming workout classes, for $500 million in 2020. In 2022, Lululemon launched its Lululemon Studio platform, which offered more than 10,000 on-demand and live-streamed classes that had been available with a Mirror subscription.
Under the new deal with Peloton, Lululemon parts with its challenged connected fitness business and hands over that responsibility to Peloton. Some analysts this week were overall upbeat about the new strategic partnership between Peloton and Lululemon for this reason.
“Perhaps most importantly, it gets Lululemon out of the challenged at-home fitness business and digital fitness content creation,” said William Blair analyst Sharon Zackfia in a recent note. “The essential outsourcing of all fitness content to Peloton will end the distraction and likely modestly bolster profitability given ongoing expenses associated with the business.”
Other analysts were more reserved, noting the potential for redundancies in both brands’ consumer bases. Jefferies analyst Randal Konik called out this overlap as the basis for his view of the partnership as a “non-event.”
