A Lululemon sign is seen at a shopping mall in San Diego, California, United States, November 23, 2022.
Mike Blake | Reuters
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 Employment Security Department on Thursday, informing it of its plans to close its distribution center in Sumner, located about 35 miles south of Seattle, and cut 128 jobs. The layoffs will begin June 21, the WARN notice states. The facility is expected to close by the end of the year, according to a Lululemon spokesperson.
“As we continue to execute on our growth strategy to meet the needs of our customers, we regularly evaluate our distribution network to help shape and support the future vision of our business. Following a review of our current infrastructure and the evolution of our order fulfillment strategy. “, which includes a multi-year investment to increase overall capacity and support our growth, we have made the decision to close one of our smaller distribution centers – located in Sumner, WA,” the spokesperson said.
“While some employees will be retained and will be transferred to other facilities, including our recently opened distribution center in the greater Los Angeles area, the optimization will result in the elimination of just over 100 positions within the center existing Sumner distribution company,” the person added. . “We are committed to supporting our impacted employees through this transition.”
The 150,000-square-foot facility has a lease that expires in July 2025, according to company filings.
Lululemon began operating a warehouse in Sumner in 2010, and it appears to be the first major distribution center the company opened in the United States after its 2007 IPO, according to securities filings.
The closure comes after Lululemon more than tripled its warehouse space in recent years to accommodate its rapid growth.
As of January 31, 2021, Lululemon leased and owned 1.12 million square feet of distribution centers across Canada and the United States, according to filings. By the end of January, that footprint reached nearly 4 million square feet.
Most of the growth comes from two new facilities leased by Lululemon outside Los Angeles and Toronto.
In 2021, it entered into a new lease for a 1.26 million square foot facility outside Los Angeles, Ontario, California, according to filings. In 2022, it leased a 980,000 square foot warehouse outside Toronto in Brampton, Ontario.
The Lululemon spokesperson said the California facility recently opened. The new Canadian facility is expected to be operational in fiscal 2026, according to company filings. The retailer previously expected the facility to be operational in fiscal 2024, according to filings.
Lululemon has spent the last decade dominating the sportswear industry and becoming one of the most popular brands among teens. Its annual revenue increased from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023.
But recently its growth in North America – its largest region in terms of sales – has started to stagnate.
In March, it reported holiday results that beat Wall Street expectations, but it issued disappointing forecasts after seeing a slowdown in U.S. sales.
In the quarter ended January 28, sales increased 9% in the Americas region, compared to 29% growth a year earlier.
— Additional reports by CNBC’s Annie Palmer
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