Lululemon, the popular athletic apparel retailer, has recently announced its plans to close its distribution center in Sumner, Washington. This decision will result in the layoff of 128 employees as the company shifts its focus to a newly opened warehouse outside of Los Angeles. The closure is part of Lululemon’s growth strategy to meet the evolving needs of its customers and support its overall business vision.
According to a spokesperson from Lululemon, the decision to close the Sumner distribution center was made after a thorough review of the company’s current infrastructure and fulfillment strategy. The closure is seen as an optimization of the distribution network, with a multi-year investment planned to increase capacity and support future growth. While some employees will have the opportunity to relocate to other facilities, the majority will be affected by the layoffs. Lululemon is committed to supporting these impacted employees through the transition.
Expansion and Growth
Lululemon’s closure of the Sumner distribution center comes after the company more than tripled its warehouse footprint in recent years to keep up with its rapid expansion. The company currently leases and owns over 1.12 million square feet of distribution centers across North America, a number that has grown to nearly 4 million square feet by January 2021. This growth is largely attributed to the opening of new facilities outside of Los Angeles and Toronto, including a 1.26 million square-foot warehouse in California and a 980,000 square foot facility in Ontario.
While Lululemon has experienced significant growth over the past decade, recent reports suggest that its expansion in North America, its largest sales region, has started to stagnate. Despite strong holiday earnings that exceeded expectations, the company faced slow sales in the U.S. resulting in modest growth compared to previous years. In the three months leading up to January 28, sales in the Americas grew by only 9%, a significant drop from the 29% growth seen in the same period the year before.
Looking Ahead
As Lululemon continues to navigate changes in consumer behavior and market trends, the closure of the Sumner distribution center represents a strategic shift in the company’s operations. By consolidating its distribution network and investing in larger, more efficient facilities, Lululemon aims to enhance its supply chain capabilities and support future growth opportunities. While the closure may have immediate implications for employees in Sumner, it is part of a broader strategy to ensure the long-term success and sustainability of the company.