Shares of Peloton Interactive (PTON) rose 15% on news that the maker of fitness bikes and treadmills has struck a five-year partnership deal with Lululemon Athletica (LULU).
Under terms of the deal, Peloton will become the exclusive provider of digital fitness content to Lululemon, an athletic apparel maker known for its yoga pants.
Going forward, Lululemon will become Peloton’s primary apparel partner. Additionally, Lululemon will stop selling its Studio Mirror fitness device by the end of the year, which had competed with Peloton’s internet-connected bikes and treadmills.
Lululemon will also discontinue its digital app-only membership tier on November 1 as part of the arrangement with Peloton.
As of October 11, Lululemon’s athletic wear will be available for purchase across all of Peloton’s retail and online stores. Lululemon, in turn, will give its Studio-All Access Members access to thousands of Peloton’s online classes for the same price they currently pay.
Peloton will eventually develop all content for Lululemon Studio, which, like Peloton, offers pre-recorded online fitness classes to users.
Analysts said the deal is good news for Peloton, which has managed to neutralize one of its direct competitors, and is also likely to profit from the sale of its fitness content with Lululemon.
Lululemon bought Mirror, a competitor to Peloton, in 2020 for $500 million U.S. But the company has been looking to shut it down coming out of the pandemic as people return to the gym.
The stock of Lululemon rose less than 1% on news of the deal with Peloton. Over the last 12 months, Lululemon’s share price has gained 23% to trade at $379.14 U.S. per share.
Peloton’s stock has declined 44% in the past 12 months and now changes hands at $4.65 U.S. a share.