Lululemon, the popular athletic apparel retailer, has announced the closure of its Washington distribution center, resulting in 128 job layoffs. The decision comes after the company opened a massive new warehouse outside of Los Angeles. The closure is part of Lululemon’s ongoing efforts to optimize its distribution network and support its future growth strategy.
The distribution center in Sumner, located south of Seattle, has been in operation since 2010 and was one of Lululemon’s first major distribution centers in the U.S. However, with the company’s rapid growth, it has more than tripled its warehouse footprint in recent years. As of January 2021, Lululemon leased and owned 1.12 million square feet of distribution centers across Canada and the U.S. By January 2022, that footprint had grown to nearly 4 million square feet.
The expansion includes two new facilities outside of Los Angeles and Toronto. In 2021, Lululemon leased a 1.26 million square-foot facility in Ontario, California, and in 2022, it secured a 980,000 square foot warehouse in Brampton, Ontario. The California facility has recently opened, while the Canadian facility is expected to be operational in fiscal 2026.
While the closure of the Washington distribution center will result in job layoffs, some employees will have the opportunity to relocate to other facilities, including the newly opened Los Angeles distribution center. Lululemon is committed to supporting its impacted employees through this transition.
The decision to close the distribution center in Sumner is a strategic move by Lululemon to optimize its operations and better align with its growth strategy. The company has experienced significant growth over the past decade, with annual sales increasing from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023. However, its growth in North America, its largest sales region, has started to stagnate.
In March, Lululemon reported holiday earnings that beat expectations but issued disappointing guidance due to slow sales in the U.S. While sales in the Americas grew 9% in the three months ending January 28, it was a significant decrease compared to the 29% growth in the same period the previous year.
The closure of the Washington distribution center is part of Lululemon’s efforts to adapt to changing market dynamics and position itself for continued success. By consolidating its distribution network and expanding its warehouse footprint in strategic locations, the company aims to better serve its customers and support future growth.
Lululemon’s decision to close the Washington distribution center highlights the challenges faced by retailers in today’s competitive market. As consumer preferences and shopping habits evolve, companies must continually evaluate their operations and make necessary adjustments to remain competitive. While job layoffs are unfortunate, Lululemon’s commitment to supporting its impacted employees through the transition is commendable.
Overall, Lululemon’s closure of its Washington distribution center is a strategic move aimed at optimizing its operations and supporting future growth. The company’s expansion into larger warehouses in Los Angeles and Toronto reflects its commitment to meeting customer demand and maintaining its position as a leading athletic apparel retailer. Despite the challenges faced by the company in North America, Lululemon remains well-positioned for continued success in the global market.
