Details of the restructuring plan
Along with its 1Q17 results release on June 1, Lululemon Athletics (LULU) also announced its restructuring plan for the Ivivva segment. Ivivva is Lululemon’s activewear brand for girls. The company operates 42 Ivivva stores in the US and 13 in Canada.
Lululemon plans to operate this business primarily through the digital channel and is looking to close 40 of its 55 stores. It will convert half of the remaining 15 stores to Lululemon-branded stores and operate a select number of Ivivva stores in key areas across North America. The company plans to shut down all of its 16 Ivivva showrooms and other temporary stores. The restructuring is expected to be completed by 3Q17.
“I’m also confident in our plans to restructure Ivivva and believe they are the best means to optimize this part of the business,” commented Laurent Potdevin, CEO of Lululemon.
Financial impact of restructuring
The pre-tax costs related to the restructuring are expected to lie between $50 million–$60 million in fiscal 2017. The company has already recognized $17.7 million of these costs in 1Q17.
ETF investors seeking to add exposure to LULU can consider the iShares Morningstar Mid-Cap Growth ETF (JKH), which invests 0.4% of its portfolio in LULU.
Move on to the next section to read about LULU’s updated guidance for fiscal 2017.