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 $US50 to $US60 million in pre-tax costs during the fiscal year related to this.
Lululemon said adjusted earnings per share in the first quarter was $US0.32, beating analysts’ forecast for $US0.28, according to Bloomberg. Net revenue totaled $US520.31 million, ahead of the estimate for $US513.69 million.
However, the company’s net revenue projection of $US565 million-$US570 million trailed analysts’ expectation for a range of $US537 million to $US587 million.