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 with the state Employment Security Department on Thursday, informing it of 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 said. The facility is expected to close by the end of the year, according to a Lululemon spokesperson.
“As we continue to implement our growth strategy to meet the needs of our guests, we regularly evaluate our distribution network to help shape and support our future business vision. After a review of our current infrastructure and the evolution of the strategy fulfillment , which includes a multi-year investment to increase overall capacity and support our growth, we 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 the recently opened distribution center in the greater Los Angeles area, the optimization will result in a reduction of just over 100 positions at the existing Sumner distribution center,” the person added . . “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 the company’s securities filings.
Lululemon first began operating a warehouse in Sumner in 2010 and appears to be the first major distribution center the company has opened in the U.S. since going public in 2007, according to securities filings.
The closing comes after Lululemon more than tripled its warehouse footprint in recent years to accommodate its rapid growth.
As of Jan. 31, 2021, Lululemon leased and owned 1.12 million square feet of distribution centers across Canada and the U.S., according to filings. By the end of this January, that footprint had grown to nearly 4 million square feet.
Most of the growth comes from two new Lululemon facilities leased outside of Los Angeles and Toronto.
In 2021, it signed a new lease for a 1.26 million-square-foot facility outside Los Angeles in 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 2026, according to company filings. The retailer previously expected the facility to be operational in 2024, the filings said.
Lululemon has spent the last decade dominating the sportswear space and becoming one of the most popular brands among teenagers. It has grown its annual sales from $1.6 billion in fiscal year 2013 to $9.6 billion in fiscal year 2023.
But recently, its growth in North America – its biggest sales region – has started to stagnate.
In March, it reported holiday earnings that beat Wall Street expectations, but issued disappointing guidance after seeing sluggish sales in the U.S.
In the three months ended Jan. 28, sales rose 9% in America, compared with a 29% increase in the year-ago period.
— Additional reference from CNBC’s Annie Palmer.