With many gyms around the world closed, and home couches turned into office desks, people are turning to brands that’ll help keep them in shape – online.
The Canadian yoga wear company, Lululemon, with most of its stores temporarily closed, has shifted efforts to digital channels – hosting pilates, yoga, dance, and other classes virtually.
An apparel brand turned Peloton rival?
“[W]e have early learnings from China which show us that our business will bounce back,” said Calvin McDonald, Chief Executive of Lululemon. “We are not yet back to pre-closing volumes, but the business is getting stronger week-by-week.”
Analysts say that Lululemon will be in even better shape post-coronavirus due to its strong balance sheet and online strategy.
To maintain cash on hand during store closures, many retailers have drawn down a portion or all of their credit revolver in order. Lululemon has $1.1 billion in cash, no debt, and an untapped $400 million credit revolver.
It isn’t the only fitness company in good shape right now. Speaking of Peloton, they are hosting up to four live sessions a day, filmed in one of their empty studios. The fancy spinning bike and treadmill maker also has a yoga app offering a free 90-day trial.
Due to official orders by California and New York to shut down nonessential businesses, other streaming athletics companies like FightCamp, Tonal, and Mirror have temporarily stopped filming new videos. Peloton, however, keeps its pedal to the metal.
“While we continue to teach a reduced number of live classes from Peloton Studios New York for the time being, like other media companies who are still on air, we are working with a limited team of only essential employees and are operating as a ‘closed set,” a Peloton spokesperson said.
Although Peloton offers thousands of on-demand videos in its library, many users prefer live classes as they feel their workouts are more effective when they can race against other riders on a live leaderboard.
Analysts say that Peloton could be seeing lower churn from existing paid users on services now that customers have fewer exercise options outside their homes.
“We are seeing Peloton subscriber growth and engagement clearly benefiting from global quarantines,” said Lee Horowitz, Evercore ISI analyst. “We do not discount the fact that a sustained global recession could put significant pressure on consumer’s discretionary budgets, and thus weigh on Peloton gross additions.”
“The company already picked up about 80% of its gross additions for this fiscal year ending in June, and that’s before it altered its March-quarter or full-year outlook yet,” he concluded.