Lululemon recently announced its plans to shut down its distribution center in Sumner, Washington, and lay off 128 employees. This decision comes after the company opened a massive new warehouse outside of Los Angeles. The athletic apparel retailer filed a WARN notice with the state’s Employment Security Department, informing them of their intention to close the facility by the end of the year.
According to a Lululemon spokesperson, the decision to close the distribution center in Sumner was made as part of the company’s growth strategy to meet the changing needs of its customers. The spokesperson stated that they regularly evaluate their distribution network to align with the future vision of the business. Given the evolution of their fulfillment strategy and investment in increasing capacity, the closure of the Sumner facility was deemed necessary.
While some employees will be retained and relocated to other facilities, including the newly opened distribution center in Los Angeles, over 100 positions will be eliminated at the Sumner distribution center. Lululemon has expressed its commitment to supporting the impacted employees through this transition.
Over the past decade, Lululemon has experienced significant growth in the athletic apparel space, growing annual sales from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023. The company has expanded its warehouse footprint to accommodate this rapid growth, leasing and owning over 1.12 million square feet of distribution centers across Canada and the U.S. as of January 31, 2021.
Despite its impressive growth, Lululemon has faced challenges in its North American market, which has started to stagnate. The company reported slower sales growth in the Americas, with sales increasing by only 9% in the three months ending January 28, compared to 29% growth in the year-ago period. While Lululemon surpassed Wall Street’s expectations in holiday earnings, it issued disappointing guidance due to sluggish sales in the U.S.
Lululemon’s decision to close its distribution center in Sumner and lay off 128 employees reflects the company’s commitment to adapting to changing market conditions and streamlining its operations to support future growth. While the closure may have a significant impact on the affected employees, Lululemon is dedicated to supporting them through this transition. As the company continues to expand and evolve, it faces challenges in its key markets but remains focused on delivering high-quality athletic apparel to its customers.
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