Lululemon plans to close its Washington distribution center and lay off 128 employees after opening a massive new warehouse outside Los Angeles, the company confirmed Friday.
The sportswear retailer filed a WARN notice with the state’s Occupational Safety and Health Department on Thursday informing it of its plans to close its distribution center in Sumner, about 35 miles south of Seattle, and eliminate 128 jobs. Layoffs will begin June 21, the WARN notice said. The facility is expected to close by the end of the year, according to a Lululemon spokesperson.
“As we continue to execute our growth strategy to meet the needs of our guests, we regularly evaluate our distribution network to help shape and support our company’s future vision. After a review of our current infrastructure and the development of our fulfillment strategy, “which includes a multi-year investment to increase overall capacity and support our growth, we have decided to close one of our smaller distribution centers – in Sumner, WA,” the spokesperson said.
“While some employees will be retained and relocated to other facilities, including our recently opened greater Los Angeles distribution center, the optimization will result in a reduction of just over 100 positions within the existing Sumner distribution center,” the person added. “We are committed to supporting our affected employees through this transition.”
The 150,000-square-foot facility has a lease in place that expires in July 2025, according to company securities filings.
Lululemon first began operating a warehouse in Sumner in 2010, and it appears to be the first major distribution center the company opened in the U.S. after its 2007 initial public offering, according to securities filings.
The closure comes after Lululemon more than tripled its warehouse space in recent years to accommodate its rapid growth.
The filings show that as of January 31, 2021, Lululemon leased and owned 1.12 million square feet of distribution centers across Canada and the United States. By the end of January this year, that space grew to nearly 4 million square feet.
Most of the growth comes from two new facilities Lululemon leased outside of Los Angeles and Toronto.
In 2021, the company entered into a new lease for a 1.26 million-square-foot facility outside Los Angeles in Ontario, California, filings show. In 2022, the company leased a 980,000 square foot warehouse outside Toronto in Brampton, Ontario.
The Lululemon spokesman said the California facility recently opened. The new Canadian facility is expected to begin operations in fiscal 2026, company filings show. The retailer had previously expected the facility to be operational in fiscal 2024, according to the documents.
Lululemon has spent the last decade dominating the sportswear space and becoming one of the most popular brands among teenagers. Annual revenue increased from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023.
But recently, growth in North America – the region with the highest sales – has begun to stagnate.
In March, the company reported holiday earnings that beat Wall Street expectations, but gave disappointing guidance after reporting weak U.S. sales
For the three months ended Jan. 28, sales in the Americas rose 9%, compared with growth of 29% in the same period last year.
—Additional reporting by CNBC’s Annie Palmer.
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2024-04-19 17:42:07
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