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Peloton to outsource all manufacturing as part of its turnaround efforts

A Peloton Interactive Inc. logo on a stationary bike at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.

Adam Glanzman | Bloomberg | Getty Images

Peloton said Tuesday that it plans to exit all of its in-house manufacturing and instead will expand its current relationship with Taiwanese manufacturer Rexon Industrial, in a bid to turn the money-losing business around.

Peloton Chief Executive Officer Barry McCarthy said this is a step for the company to simplify its supply chain and fix its cost structure, which is a top priority.

“We believe that this along with other initiatives will enable us to continue reducing the cash burden on the business and increase our flexibility,” McCarty said in a statement.

Peloton shares recently climbed more than 6% in premarket trading.

Peloton said that Rexon is now set to become the primary manufacturer Peloton’s Bike and Tread machines. The company is also going to be suspending operations at its Tonic Fitness facility through the remainder of 2022. Peloton acquired Tonic in October of 2019.

The company did not disclose any financial impact in its press release. It also wasn’t immediately clear what this meant for Peloton’s Precor business, which Peloton bought for $420 million in order to expand its manufacturing capabilities in the United States.

McCarthy, a former Spotify and Netflix executive, was named CEO of Peloton in early February, replacing founder John Foley. He took over as the company’s expenses spiraled out of control and demand for its connected fitness equipment waned.

At that time of the C-suite shakeup, Peloton announced it was slashing roughly $800 million in annual costs. That included cutting 2,800 jobs, or about 20% of corporate positions. Peloton also said it would be walking away from plans to build a sprawling production facility in Ohio.

CNBC reported in January that Peloton planned to temporarily halt production of its equipment, according to internal documents detailing those plans, as a way to control costs with demand dropping.

One of Foley’s biggest missteps was making long-term bets on Peloton’s supply chain during the peak of the pandemic, as stuck-at-home consumers were eager to shell out hundreds of dollars for ways to break a sweat in the living room or garage.

The dynamic quickly reversed, however, as Covid vaccines were made widely available and gyms and indoor fitness studios were able to reopen without so many restrictions.

From the start of his reign, McCarthy has made it clear he is more interested in Peloton as a subscription business than as a manufacturer.

Already, he has raised prices of Peloton’s all-access fitness membership and is testing a new model where customers can pay a flat rate to rent a piece of equipment and take its on-demand workout classes.

He’s also been tasked with trying to boost employee morale, particularly with the company’s share price under so much pressure. Peloton’s stock is down more than 75% so far this year, as of Monday’s market close.

Last week, employees at the company learned that Peloton is offering one-time cash bonuses to hourly workers who stay on through early next year and is making changes to its stock compensation plans, given the share price.

“Pivoting away from owned manufacturing is likely the right move,” said BMO Capital Markets analyst Simeon Siegel, who added that McCarthy appears to be trying to “reverse past mistakes” from the Foley era.

“There will clearly be savings,” Siegel said. “But given the state of Peloton’s balance sheet, it is worth questioning what it costs to unwind and what else needs to be done.”

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Kohl’s terminates sale talks with Vitamin Shoppe owner Franchise Group: Sources

A Kohl’s store in San Rafael, Calif.

Getty Images

Kohl’s is terminating talks to sell its business to The Vitamin Shoppe owner Franchise Group, two people familiar with the matter told CNBC on Thursday.

The people requested anonymity because a decision from Kohl’s has not been publicly announced.

Representatives from Kohl’s and Franchise Group didn’t immediately respond to CNBC’s requests for comment.

This decision from Kohl’s comes as its stock price slumps and its sales decline. It has faced months of pressure from activist investors to pursue a sale and shake up the business with a new slate of board directors. It wasn’t immediately clear what path Kohl’s would take next.

Financing such a deal has also become more difficult due to volatility in the stock market and broader economy, as the Federal Reserve jacks up interest rates to counter surging inflation. Walgreens Boots Alliance earlier this week scrapped its plan to sell its U.K. pharmacy chain, Boots, saying no third party was able to make an adequate offer due to turmoil in the global financial markets.

Franchise Group had been weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, CNBC reported last week, citing a person familiar with the matter. The shift in thinking came as the outlook for the retail industry grew increasingly grim, the person said, as fears of a recession mounted.

Franchise Group in early June proposed a bid of $60 per share to acquire Kohl’s at a roughly $8 billion valuation. The two companies then entered an exclusive three-week window during which they can firm up any due diligence and final financing arrangements. That ran its course this past weekend.

Kohl’s shares closed Thursday at $35.69. At one point during the day the stock touched a 52-week low of $34.33. Kohl’s ended the day with a market valuation of roughly $4.6 billion, its shares down about 28% so far this year.

Kohl’s earlier this year received a per-share offer of $64 from Starboard-backed Acacia Research, but it deemed the bid to be too low.

Activist firm Macellum Advisors has been pushing for Kohl’s to consider a sale or consider other strategic alternatives since January. Macellum was also arguing for Kohl’s to revamp its slate of directors, arguing the retailer, under Chief Executive Officer Michelle Gass, has underperformed in recent years compared with its peers.

Macellum didn’t immediately respond to a request for comment.

In mid-May, however, Kohl’s shareholders voted to reelect the company’s current slate of 13 board directors, thereby defeating Macellum’s proposal.

In recent weeks, the outlook for the retail industry has grown bleaker as consumers pull back their spending on certain discretionary categories, such as home goods and apparel, amid inflation and the threat of an economic slowdown.

High-end furniture chain RH on Wednesday cut its forecast for revenue in fiscal 2022, anticipating softer consumed demand for its products in the back half of the year. Bed Bath & Beyond saw its sales plummet in its most recent quarter and ousted its CEO.

Companies are also seeing inventories pile up as shipments of goods arrive later than planned, due to supply chain snags. Big-box retailer Target in early June warned investors that its profits will take a short-term hit, as it marks down unwanted items, cancels orders and takes aggressive steps to get rid of extra inventory.

Kohl’s sales for the three-month period ended April 30 fell to $3.72 billion from $3.89 billion in 2021. When it reported these figures in mid-May, the retailer also slashed its profit and revenue forecasts for the full fiscal year, further muddying the picture for a potential deal.

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Ex-Apple exec Ron Johnson’s Enjoy Technology files for bankruptcy

Ron Johnson during a panel discussion at the CNBC Evolve New York event on June 19, 2019.

Astrid Stawiarz | CNBC

Enjoy Technology, a retail startup founded by former Apple and J.C. Penney exec Ron Johnson, filed for Chapter 11 bankruptcy protection on Thursday, mere months after it made its stock market debut.

The company’s liquidity has dwindled while its business has suffered from staffing shortages. Enjoy, which operates mobile retail stores, went public in October through a merger with a special-purpose acquisition company, or SPAC.

Enjoy said in a filing that it plans to sell its assets in the United States to the technology repair company Asurion.

Asurion has agreed to provide $55 million of financing so that Enjoy can continue to operate as it reorganizes in bankruptcy protection from creditors, the filing said. Enjoy expects Asurion’s bid will be sufficient to pay all of its secured and unsecured creditors.

Enjoy and Asurion didn’t immediately respond to requests for comment.

Johnson, who is also CEO of Enjoy, founded the company in 2014. He is best known for helping to create Apple’s retail business and for trying to turn around the J.C. Penney department store chain, albeit unsuccessfully. He was there from 2011 to 2013, a period in which his strategy alienated the retailer’s core customers.

Last year, amid a frenzy of SPAC deals, Enjoy went public through a merger with the black-check company Marquee Raine Acquisition Corp. At the time, the transaction valued the combined business at an enterprise value of roughly $1.2 billion.

But more recently, Enjoy was hurt part as SPAC investors started to take back their money and the business was left with less cash, court filings show.

Enjoy lists only $523,000 in cash on hand. The company said it has already begun laying off about 400 U.K.-based employees, or roughly 18% of its total workforce.

Enjoy counted venture-capital firms including Kleiner Perkins and Andreessen Horowitz as initial backers. This past spring was when the business started to evaluate strategic alternatives.

Its shares, which trade under 20 cents apiece, are down more than 96% this year, including Thursday’s losses.

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Franchise Group considers lowering Kohl’s bid closer to $50 a share from $60

People walk near a Kohl’s department store entranceway on June 07, 2022 in Doral, Florida. Kohl’s announced that it has entered into exclusive negotiations with Franchise Group, which is proposing to buy the retailer for $60 per share. 

Joe Raedle | Getty Images

Retail holding company Franchise Group is weighing lowering its bid for Kohl’s to closer to $50 per share from about $60, according to a person familiar with the deal talks.

Kohl’s shares dropped more than 8% on Wednesday afternoon to roughly $39 per share. They traded as low as $34.64 in late May.

Franchise Group, owner of The Vitamin Shoppe and other retailers, is actively considering whether buying Kohl’s is the best use case of Franchise Group’s capital, said the person, who asked to remain anonymous since the conversations are private and ongoing. The company is growing concerned that the environment for certain retailers could become bleaker from here, particularly if the U.S. were to enter a recession, the person said.

Franchise Group has lined up financing with lenders, the person added. But the company, run by Chief Executive Officer Brian Kahn, is weighing a lower price now as retailers in general grapple with bloated inventory and higher prices.

Big-box retailer Target said earlier this month that it will take a short-term hit to profits as it cancels orders and marks down unwanted merchandise ahead of the busy back-to-school and holiday shopping seasons. Analysts expect many retailers will have to take a similar hit, and it could be a bigger blow for the ones that aren’t as successful moving products off shelves.

Earlier this month, Franchise Group proposed a bid of $60 per share to acquire Kohl’s at a roughly $8 billion valuation. The two companies then entered an exclusive three-week window during which they can firm up any due diligence and final financing arrangements. That ends this weekend.

The off-mall department store chain was first urged to consider a sale or another alternative to boost its stock price in early December 2021 by New York-based hedge fund Engine Capital. At the time, Kohl’s shares were trading around $48.45.

Then, in mid-January, activist hedge fund Macellum Advisors pressured Kohl’s to consider a sale. Macellum’s CEO, Jonathan Duskin, argued that executives were “materially mismanaging” the business. He also said Kohl’s had plenty of potential left to unlock with its real estate.

Earlier this year, Kohl’s received a per-share offer of $64 from Starboard-backed Acacia Research, but deemed the bid to be too low.

In mid-May, Kohl’s reported that its sales for the three-month period ended April 30 fell to $3.72 billion from $3.89 billion in 2021.

The retailer slashed its profit and revenue forecasts for the full fiscal year, which also muddied the picture for a potential deal.

Representatives for Kohl’s and Franchise Group didn’t immediately respond to CNBC’s requests for comment.

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Peloton Swaps Out Finance Chief as It Navigates Persistent Losses

Peloton Interactive Inc.

is exchanging its top finance executive about four months after it named a new chief executive, a move that comes as the fitness-equipment maker navigates persistent losses.

The New York-based at-home exercise equipment company on Monday said

Liz Coddington

will serve as its chief financial officer, effective June 13. Peloton said its current CFO,

Jill Woodworth,

decided to leave after more than four years with the company.

Peloton said Ms. Woodworth will remain with the company as a consultant on an interim basis to help prepare the fiscal year 2022 financial results.

Ms. Coddington most recently served as vice president of finance for Amazon Web Services, an

Amazon.com Inc.

subsidiary that provides on-demand cloud computing platforms. Before that, she held CFO and leadership finance roles at companies including retailer

Walmart Inc.

and streaming business

Netflix Inc.

Ms. Coddington joins Peloton as the company is dealing with waning demand from consumers after facing issues around its ability to meet orders, which soared during the early stages of the pandemic. The surge in demand for Peloton bikes led the company to break ground on a million-square-foot factory in Wood County, Ohio, last year.

Peloton is now looking to sell the factory that it will never use. The company also slashed prices for its equipment, projected slower growth and had to borrow $750 million to fund its operations.

Peloton in May reported its largest quarterly loss since the company went public in 2019, reporting a net loss of $757.1 million for the quarter ended March 31, compared with a loss of $8.6 million in the prior-year period.

In February, Peloton replaced Chief Executive

John Foley

with

Barry McCarthy,

who previously led the finances of digital music service

Spotify Technology SA

and Netflix. The company also cut 2,800 jobs amid reduced demand for its exercise equipment. Mr. Foley was closely associated with the company’s growth phase after its public offering and the revenue surge early in the pandemic.

The change in the CFO-seat makes sense given the continuing restructuring under Mr. McCarthy, said

Rohit Kulkarni,

managing director at equity trading and research firm MKM Partners LLC.

“As the new CEO puts his mark on the organization’s structure and aligns it with where he wants the company to go, these changes are not completely surprising,” he said.

With Peloton’s fiscal year ending June 30, Ms. Coddington will very quickly be “under a bigger investor microscope,” as the expectation is that the company will release fiscal year guidance soon after she joins, Mr. Kulkarni said. “It will be a challenging task to provide that new guidance.”

Write to Jennifer Williams-Alvarez at jennifer.williams-alvarez@wsj.com and Mark Maurer at Mark.Maurer@wsj.com

Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Levi Strauss & Co. (LEVI) reaffirms 2022 outlook, boosts guidance

A sign is posted in front of the Levi Strauss & Co. headquarters on April 09, 2021 in San Francisco, California.

Justin Sullivan | Getty Images News | Getty Images

Levi Strauss & Co. on Wednesday maintained its outlook for the full year and boosted its financial targets over the next five years as the denim retailer grows its e-commerce business.

The company views itself as much stronger than it was before the Covid pandemic and since its public market debut in March 2019.

“We are reaffirming full-year guidance, despite all the headwinds,” Chief Financial Officer Harmit Singh said in an interview, ahead of Levi’s annual investor day event. “The trends we’re seeing in the business give us confidence,” Singh said. “We are looking at the short term, while also not losing sight of the long term.”

In recent weeks, retailers from Walmart to Abercrombie & Fitch have alluded to the challenges that they are facing, from ongoing supply chain problems and mismatched inventories, to red-hot inflation and a potential pullback in consumer spending.

Retail executives have said that lower-income shoppers are already feeling the pinch of higher prices on goods and adjusting their budgets accordingly, while wealthier households are splurging on new outfits, makeup and luggage for summer travel. The split in behavior has resulted in a similar divide in the retail industry. So far this earnings season, luxury and high-end brands — from Canada Goose to Michael Kors parent Capri Holdings — have largely outperformed businesses that cater to price-conscious consumers.

Levi doesn’t expect the volatile economic backdrop will dent demand for its jeans.

It now sees annual revenue growing in a range of 6% to 8%, up from prior targets of 4% to 6%, through 2027. If achieved, that would bring Levi’s revenue close to $10 billion five years from now.

For fiscal 2022, it still projects sales to increase between 11% and 13% from 2021 levels, with adjusted earnings per share falling within a range of $1.50 to $1.56. Analysts had been looking for revenue to rise 11.8%, with Levi earning a per-share adjusted profit of $1.55, according to Refinitiv data.

By 2027, Levi said it aims to expand its direct-to-consumer business to 55% of total sales and triple e-commerce revenue.

Levi’s direct business accounted for about 36% of total sales in the retailer’s latest fiscal year that ended Nov. 28. Digital revenue, including from wholesale partners, made up 22% of total revenue of $5.8 billion that year, according to an annual filing.

“As we continue to scale [e-commerce], that business becomes a lot more profitable,” Chief Executive Officer Chip Bergh said in an interview. “Before the pandemic, our e-commerce business was a money-loser.”

In addition to growing online, Levi is also pushing shoppers to buy more than just the company’s iconic denim bottoms. It’s aiming to nearly double revenue from tops by 2027. Levi is also projecting its women’s business, which accounts for about one-third of sales currently, will double by then.

According to Singh, Levi’s women’s business has higher gross margins than the company’s overall average gross margins.

Levi anticipates its Dockers and Beyond Yoga banners to contribute combined revenue of nearly $1 billion by 2027. Levi acquired Beyond Yoga, famous for its women’s leggings and stretchy tops, for an undisclosed amount last year.

Shares of Levi are down about 28% this year.

This story is developing. Please check back for updates.

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Luxury stores still limiting crowds post-COVID — and won’t admit why

COVID-19 is waning, but shopping for a Louis Vuitton bag, a Chanel suit or a pair of Gucci loafers increasingly means standing in line outside a boutique — and luxury brands have been conspicuously tight-lipped on why.

Most elite labels leaned into “appointment shopping” during the height of the pandemic, citing the need for social distancing. But as the threat from the virus recedes, some including Cartier and Harry Winston continue to impose the new policy.

They also have failed to convince shoppers and experts alike of their reasoning — if they bother to explain themselves at all. Major brands including Louis Vuitton, Chanel and Cartier didn’t respond to calls and emails from The Post about their persistent use of stanchions in front of store entrances, where queued-up shoppers are quizzed by “greeters” about prospective purchases before entering.

Chanel said it will open “private” stores for its top customers next year.
Bloomberg via Getty Images

“We recommend booking an appointment prior to your boutique visit, as walk-ins may experience extended wait times,” Cartier’s website advises, without elaborating.

According to experts, roped-off customers can mostly thank a relentless epidemic of smash-and-grab robberies rather than social distancing for ramped-up crowd controls nationwide, including in New York, Chicago, Miami, San Francisco and Seattle. Theft got so bad last year that Beverly Hills hired two private security firms to patrol Rodeo Drive.

Meanwhile, at the Westchester Mall in White Plains, NY, where robbers ransacked a Louis Vuitton store in February, the boutique’s doors were closed, with stanchions inviting shoppers to queue up outside.

Some luxury boutiques question customers before they enter the store, asking what they are looking for.
Jeffrey Greenberg/UCG/Universal

A pair of greeters wearing headsets — flanked by a pair of beefy mall security guards — asked customers whether they were there to pick up an order or to shop. Shoppers were let in only when an associate was ready to accompany them inside.

“They don’t want customers looking around the store without a store employee with them,” a sales associate told The Post. 

Beverly Hills hired private security companies to patrol after smash-and-grab crime surged this year.
MEGA

Luxury brands have managed to obscure the embarrassment of the situation partly because making it difficult to enter their stores “creates an aura of exclusivity,” says Steve Dennis, a Dallas-based retail consultant.

“Most of these stores aren’t crowded anyway,” and the lines are getting longer in states like Texas, “which didn’t particularly take COVID seriously,” said Dennis, author of “Remarkable Retail: How to Win & Keep Customers in the Age of Disruption.”

“The new nightclub, in its own weird way, is getting into a Dolce & Gabbana store on a Saturday,” adds luxury retail consultant Melanie Holland.

Gucci is among the luxury brands where customers are asked to wait in line before entering stores.
Bloomberg via Getty Images
luxury boutiques across the country, including this Miami Gucci store, limit how many customers can enter at one time.
Jeffrey Greenberg/UCG/Universal

Last week, a Chanel executive provoked chatter when he disclosed in an interview that the company plans to open “private” boutiques in Asia next year for top clients. Chanel is hiring 3,500 new employees for the initiative, which experts say could be adopted in the US.

“Our biggest preoccupation is to protect our customers and in particular our pre-existing customers,” Chanel’s chief financial officer Philippe Blondiaux told Business of Fashion. “We’re going to invest in very protected boutiques to service clients in a very exclusive way.”

In response, fashion blog Highsnobiety questioned “What, exactly, do Blondiaux and Chanel want to ‘protect’ its customers from?”

Holland speculated that Chanel may be looking to keep its wealthy clients from becoming targets for thieves after they leave stores. But big spenders also aren’t typically walking in off the street, she adds.

“People who want to spend $25,000 for a small dress don’t want to stand in line,” Holland said. “Those customers are probably making an appointment with their personal shopper — they know that line isn’t meant for them.”

Some luxury stores are still requiring customers to make an appointment to shop.
Bloomberg via Getty Images

As previously reported by The Post, Madison Avenue boutiques on the Upper East Side in Manhattan including Chanel, Prada and Carolina Herrera are dimming their lights, locking their doors, and opening by appointment only in a bid to deter a wave of brazen daytime shoplifters that have terrorized the glitzy thoroughfare this year.

In February, a team of seven thieves strolled out of The Real Real on Madison at 71st Street with nearly $500,000 worth of handbags and jewelry.

In the wake of such heists, there is simply a “new lack of trust” on the part of retailers “about who is walking through their doors,” said Susan Scafidi, founder and director of the Fashion Law Institute at Fordham Law School.

In practice, most luxury brands assign a sales associate to each customer or group. The days of walking into an exclusive boutique and “browsing” without an associate shadowing you are largely over, said one sales rep.

Meanwhile, staffers at upscale boutiques including Chanel, Gucci and Burberry are being armed with talking points for inquisitive customers, some of which sound plausible.

“We are still dealing with shipping delays from Paris and you don’t want everyone to come in and to notice that the store doesn’t have the latest styles,” a sales associate at a boutique operated by a major luxury label told The Post, speaking on the condition of anonymity.

“You want to be able to tell them one-on-one that the pieces are on the way,” the associate added.

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Lululemon (LULU) announces new 5-year targets at analyst day 2022

A customer looks at athletic apparel inside a Lululemon store.

Xaume Olleros | Bloomberg | Getty Images

Lululemon aims to double its 2021 revenue in the next five years, putting it on track to hit $12.5 billion in sales by 2026, as the retailer rides a wave of pandemic-fueled demand for workout clothes.

Lululemon on Wednesday announced a handful of longer-term growth targets, including for its men’s business, ahead of a scheduled analyst day event. It cited three key drivers of momentum in the coming years: product innovation, customer experience and market expansion.

The athletic apparel retailer is aiming to double its men’s revenue, double its digital sales, and quadruple international revenue, all in the next five years. Lululemon teased the official debut of a new membership offering in the coming months, as well as its foray into Spain and Italy through new brick-and-mortar shops.

“We remain early in our growth journey,” said Lululemon Chief Executive Calvin McDonald, in a statement. “I am excited about taking our growth strategies to the next level.”

The retailer’s sales grew more than 40% in 2021 from the prior year, totaling $6.25 billion, fueled by a strong direct-to-consumer business and overseas momentum for its yoga pants, leggings and sports bras. That’s compared with revenue of $3.98 billion in 2019.

In April of 2019, Lululemon had laid out a number of financial targets, including doubling its then-nascent men’s business, by 2023. It ended up achieving the men’s goal two years ahead of schedule and also tripled digital revenue from 2018 to 2021.

The company’s shares are up about 25% over the past 12 months.

Lululemon said Wednesday that it projects earnings-per-share growth to outpace revenue growth in the next five years. It expects to increase its square footage annually in the low double digits. Its women’s business and North American division are projected to see low, double-digit annual compound growth rates in revenue through 2026.

Lululemon’s Chief Financial Officer Meghan Frank called the targets “bold but realistic.”

The company cited recent initiatives including its first-ever footwear collection and a trade-in and resale program that it said should help to achieve these fresh financial targets.

Lululemon is expected to share more around these goals, and answer analysts’ questions, during a meeting set to kick off later Wednesday morning.

This story is developing. Please check back for updates.

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Lululemon footwear marks new product to take on Nike, Adidas

Lululemon CEO Calvin McDonald said that launching into shoes was the next natural step for the leggings maker.

Source: Lululemon

Lululemon is venturing into footwear, marking a new product category for the maker of leggings and sports bras and deepening its rivalry with giants like Nike and Adidas.

The company’s first-ever running shoe for women, called Blissfeel, will be available to purchase starting March 22 in select markets across North America, Mainland China and the United Kingdom. The running shoes will retail for $148.

The launch marks Lululemon’s official foray into the sneaker category, having only previously sold a small collection of shoes from Athletic Propulsion Labs. The footwear business, for women and men, could prove to be another important lever of growth for the athletic clothing retailer as it seeks to catch its larger competitors.

Sneaker sales have boomed during the pandemic as more consumers pick up running or opt for more comfortable shoes while working from home. It’s an incredibly heated category with competitors ranging from giants like Nike and On Running to more niche brands like Allbirds, which also makes a running shoe.

Lululemon said it’s aiming to launch a men’s footwear collection next year, at which point it will expand its selection for women with special-edition shoes and seasonal sneakers.

In the meantime, Lululemon said it will debut two types of women’s cross-training sneakers this summer, priced at $138 and $148, followed by a slide-on shoe meant for post-workout wear, at $58, and another training sneaker with a more supportive midsole, at $128.

Lululemon will begin this year by launching a running shoe and other options for women, followed by a men’s footwear collection in 2023.

Source: Lululemon

The launches check off a long-awaited goal for Lululemon and Chief Executive Calvin McDonald.

Back in 2019, before the coronavirus pandemic, McDonald said the company saw a whitespace in the shoe market. He hinted that at some point Lululemon would begin selling its own footwear, building on the success it had with APL.

McDonald said in a statement Tuesday that branching into the footwear market was the next natural step for the company.

“It represents an exciting moment for our brand,” he said. “We are entering the footwear category the same way we built our apparel business — with products designed to solve unmet needs, made for women first.”

Athletic footwear sales in the United States grew 17% for men and 24% for women in 2021 compared with 2020 levels, according to data from market research firm NPD Group.

The top sneaker brands for women, notably, are Nike, Skechers, Adidas, Brooks and New Balance, according to NPD sports analyst Matt Powell. Powell said he anticipates sales of both women’s and men’s sports footwear will grow a low-single-digit percentage this year, coming off of last year’s gains, with the first half of 2022 facing bigger challenges for the industry than the latter half.

Early last year, another round of stimulus checks from the government propelled consumer spending, Powell said. And many shoppers opted for a new pair of shoes.

Lululemon’s sales for the 12 months ended Jan. 31, 2021 grew to $4.4 billion from $3.98 billion a year earlier. Its stock is down more than 20% year to date.

Nike, for comparison, raked in $44.5 billion in sales in its fiscal year ended May 31, up 19% from prior-year levels. Adidas has yet to report its results for 2021. Its revenue for the 12 months ended Dec. 31, 2020, amounted to 19.8 billion euros, or about $21.6 billion.

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Macy’s (M) reports Q4 2021 earnings beat

People wear facemasks as they walk through Herald Square on January 8, 2021 in New York City.

Angela Weiss | AFP | Getty Images

Macy’s on Tuesday reported fiscal fourth-quarter earnings and sales that outpaced analysts’ estimates and said that a strategic review has prompted the retailer to accelerate its turnaround plans.

It is rejecting calls from activist Jana Partners for it to split its e-commerce operations from its stores, following a similar move by Saks Fifth Avenue. Macy’s had been working with consulting firm AlixPartners to consider the best path forward for the business.

Macy’s shares rose more than 8% in premarket trading following the news.

During the holiday period, the department store chain said it brought in roughly 7.2 million new customers. Chief Executive Jeff Gennette said the department store chain was able to deliver the solid results despite Covid-19 related disruptions, supply chain issues, labor shortages and elevated inflation.

Here’s how Macy’s did in its fourth quarter compared with what analysts were anticipating, based on a survey compiled by Refinitiv:

  • Earnings per share: $2.45 adjusted vs. $2 expected
  • Revenue: $8.67 billion vs. $8.47 billion expected

Net income for the three-month period ended Jan. 29 grew to $742 million, or $2.44 a share, from $160 million, or 50 cents per share, a year earlier. Excluding one-time items, the retailer earned $2.45 a share, better than the $2 that analysts were looking for.

Revenue grew to $8.67 billion from $6.78 billion a year earlier, beating expectations for $8.47 billion.

Same-store sales, on an owned-plus-licensed basis, rose 27.8% year over year. Analysts were looking for same-store sales growth of 24.25%, according to Refinitiv. The metric was up 6.1% on a two-year basis.

Digital sales rose 12% year over year and increased 36% on a two-year basis. E-commerce represented 39% of net sales.

The company cited strong performance in categories including home, fragrances, jewelry, watches and sleepwear.

Macy’s also offered an upbeat outlook for fiscal 2022, calling for sales to range between $24.46 billion and $24.7 billion, which would be flat to up 1% compared with 2021. Analysts had been looking for revenue of $24.23 billion, which would have been a slight decrease from the prior year.

Macy’s sees adjusted earnings per share for the year to be between $4.13 and $4.52. That’s better than the $4.04 analysts were looking for.

The company said in a press release it anticipates positive momentum and strong consumer demand in the months ahead. However, it said macro challenges such as inflation, supply chain pressures and labor shortages will persist. It said its annual outlook takes this into consideration.

Also on Tuesday, Macy’s announced a new $2 billion share repurchase program.

Macy’s shares are down about 2% year to date, as of Friday’s market close. Its market cap is $7.7 billion.

Find the full earnings press release here.

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