Delta variant, inflation, stagflation, transitory, supply chain disruptions, employment shortages and the list goes on. These are terms used by many media sources all in effort to describe the perceived current economic state of our own country and others throughout the world.

What I find interesting is the difference between the media’s perspective of the economy versus how effective management teams of publicly traded companies have become over the years. Rather than focusing on meaningless financial terms that do nothing for investors, I wanted to bring attention to how effective CEO’s and their management teams can be and why we should turn our attention to them rather than a collection of catchy headlines.

Mergers & Acquisitions

Have you heard of a company called #Mirror? If you do not know the company, Mirror is on a mission to change the fitness landscape by making it easy for anyone to engage in live interactive workout classes all from the comfort of their own home. For a monthly fee, members have access to these workout sessions.

Surprisingly, consumers started buying the large mirror product with technology capabilities for $1,500 (before tax and installation fees) plus accepted to pay an ongoing subscription fee of $39 per month. That’s far more expensive than a regular gym membership. But that’s not the point here. Mirror launched their in-home gym experience 2 years before Covid-19 changed the entire “normal” gym landscape. Talk about being ahead of consumer #behavior.

Mirror was launched in 2018 and surprisingly raised $72 million from investors including Lululemon. Fast forward to 2021 and Lululemon now owns the entire company. In my opinion, Lululemon buying Mirror was a pretty big deal especially when you see how an athletic apparel company not only transformed into a tech company overnight but how quickly the company adapted to the current pandemic environment.

If you thought the only way a company like Lululemon could make more money was all based on their sales volume, you would not be alone. Lululemon’s management team executed a fantastic acquisition proving that a pandemic was not going to hold them back from creating wealth for their shareholders.

What is this week’s takeaway?

There is no magic formula for evaluating management, but there are factors to which you should pay attention. In the case of purchasing Mirror, Lululemon now has a platform to receive recurring revenue through monthly subscriptions.

Good management pays for itself time and time again by increasing shareholder value regardless of the landscape that today include a #delta #variant, #inflation, #stagflation, #transitory, supply chain disruptions, employment #shortages.

Have a great weekend!

Talk soon,

Michael