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 athletic apparel retailer filed a WARN notice Thursday with the state Occupational Safety and Health Administration, notifying it of its plans to close its distribution center in Sumner, about 35 miles south of Seattle, and eliminate 128 jobs. The layoffs will begin June 21, the WARN release said. The facility is expected to close by the end of the year, according to a Lululemon spokesperson.
“As we continue to deliver on our growth strategy to meet the needs of our guests, we regularly evaluate our distribution network to shape and support the future vision of our company. After evaluating our current infrastructure and the evolution of our fulfillment strategy, including “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 relocated to other facilities, including our recently opened distribution center in the Los Angeles area, the optimization will result in a reduction of just over 100 positions within the existing Sumner distribution center,” the person added to it. . “We are committed to supporting our affected employees during 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 U.S. after going public in 2007, securities filings show.
The closure comes after Lululemon more than tripled its warehouse space in recent years to accommodate rapid growth.
As of Jan. 31, 2021, Lululemon leased and owned 1.12 million square feet of distribution centers in Canada and the U.S., the filings show. By the end of January, that footprint had grown to almost 4 million square feet.
Most of the growth comes from two new facilities Lululemon has leased outside Los Angeles and Toronto.
In 2021, it entered into a new lease for a 1.26 million-square-foot facility outside Los Angeles in Ontario, California, the documents show. In 2022, it leased a 980,000-square-foot warehouse outside Toronto in Brampton, Ontario.
Lululemon's spokesperson said the California facility recently opened. The new Canadian facility is expected to be operational in fiscal 2026, company documents show. The retailer previously expected the facility to be operational in fiscal 2024, the documents said.
Lululemon has dominated the sportswear world over the past decade, becoming one of the most popular brands among teens. Annual revenue increased from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023.
But recently, growth in North America – the largest region by revenue – started to stagnate.
In March, it reported holiday earnings that beat Wall Street expectations, but issued disappointing guidance after sluggish U.S. sales
In the three months ended January 28, Americas sales grew 9%, compared with 29% growth in the same period a year ago.
— Additional reporting by CNBC's Annie Palmer.