lululemon The company confirmed on Friday that it plans to close its Washington distribution center and lay off 128 employees after opening a massive new warehouse outside Los Angeles.
The athletic apparel retailer filed a warning notice Thursday with the state’s Employment Security Department notifying it of plans to close its distribution center in Sumner, about 35 miles south of Seattle, and lay off 128 people. WARN informed that the layoffs will begin on June 21. A Lululemon spokesperson said the facility is expected to close by the end of the year.
“As we continue to implement our growth strategies to meet the needs of our guests, we regularly evaluate our distribution network to help shape and support the future vision of our business. This follows a review of our current infrastructure and the evolution of our fulfillment strategy, including a Following a multi-year investment to increase overall capacity and support our growth, we have decided to close a smaller distribution center in Sumner, Washington.
“While some employees will be retained and transferred to other facilities, including our recently opened distribution center in the greater Los Angeles area, optimization will result in the elimination of more than 100 positions within the existing Sumner distribution center,” the person added. “We are committed to supporting affected employees through this transition period.”
The lease for the 150,000-square-foot facility is set to expire in July 2025, according to the company’s securities filings.
Lululemon first began operating a warehouse in Sumner in 2010, which appeared to be the first major distribution center it opened in the U.S. after the company went public in 2007, according to securities filings.
Lululemon shuttered the company after more than tripling its warehouse footprint over the past few years to accommodate its rapid growth.
Documents show that as of January 31, 2021, Lululemon leased and owned 1.12 million square feet of distribution centers in Canada and the United States. At the end of January this year, the area grew to nearly 4 million square feet.
Much of the growth comes from Lululemon leasing two new facilities outside Los Angeles and Toronto.
In 2021, the company signed a new lease for a 1.26 million-square-foot facility outside Los Angeles in Ontario, California, documents show. In 2022, it leased a 980,000-square-foot warehouse in Brampton, Ont., outside Toronto.
A Lululemon spokesperson said the California factory recently opened. The new Canadian plant is expected to be up and running in fiscal 2026, company documents show. The retailer previously expected the facility to be operational in fiscal 2024, the filing said.
Lululemon has dominated the athletic apparel space for the past decade and has become one of the most popular brands among teens. The company’s annual sales have grown from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023.
But recently, the company’s growth has stalled in North America, its largest region by sales.
In March, the company reported holiday earnings that beat Wall Street expectations but issued disappointing guidance after seeing slow U.S. sales
Sales in the Americas grew 9% in the three months ended January 28, compared with 29% growth in the same period last year.
— Supplementary report CNBC’s Anne Palmer.
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