Lululemon surges after beating on earnings and announcing store closures for its kids' line
Lululemon gained as much as 8% in extended trading on Thursday after the company reported better earnings and revenues than expected, and plans to restructure its kids' clothing line.
Ivivva, the activewear brand for girls, will become a primarily online-only business as 40 of the 55 stores close, Lululemon said in its earnings statement.
Half of the remaining locations will be converted to Lululemon stores. All Ivivva-branded showrooms will be shut down.
Lululemon expects the restructuring to be mostly completed by the third quarter of fiscal 2017, and anticipates $50 to $60 million in pre-tax costs during the fiscal year related to this.
Lululemon's CEO Laurent Potdevin had said during the first quarter that the year was off to a "slow start" amid weak online sales and competition from companies like Under Armour and Amazon that were also designing workout clothes suitable for everyday wear.
"I'm excited to see the positive trends that materialized late in Q1 continuing into Q2," Potdevin said in the first-quarter earnings statement. "... I'm also confident in our plans to restructure Ivivva and believe they are the best means to optimize this part of the business."
Lululemon said adjusted earnings per share in the first quarter was $0.32, beating analysts' forecast for $0.28, according to Bloomberg. Net revenue totaled $520.31 million, ahead of the estimate for $513.69 million.
However, the company's net revenue projection of $565 million to $570 million trailed analysts' expectation for a range of $537 million to $587 million.
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