Lululemon recently announced its decision to shut down its Washington distribution center and lay off 128 employees. This move comes after the opening of a new warehouse near Los Angeles. The company explains that as part of its growth strategy, it regularly evaluates its distribution network to align with the future vision of the business. Following a review of infrastructure and fulfillment strategy, Lululemon made the decision to close its smaller distribution center in Sumner, Washington.
While some employees will have the opportunity to relocate to other facilities, the closure will result in the reduction of over 100 positions within the Sumner distribution center. The company has expressed its commitment to supporting affected employees through this transition period.
The distribution center in Sumner spans 150,000 square feet and has a lease that expires in July 2025. Lululemon initially began operations at this warehouse in 2010, making it one of the first major distribution centers for the company in the U.S. The closure comes after Lululemon significantly expanded its warehouse footprint in recent years to accommodate its rapid growth.
Expansion Strategy
By January 31, 2021, Lululemon owned or leased 1.12 million square feet of distribution centers across the U.S. and Canada. This footprint grew to nearly 4 million square feet by the end of January, with the addition of new facilities in Los Angeles and Toronto. The company leased a 1.26 million square foot facility in Ontario, California, in 2021, and a 980,000 square foot warehouse in Brampton, Ontario, in 2022. The new Canadian facility is expected to be operational by fiscal 2026.
Lululemon has experienced significant growth over the past decade, increasing annual sales from $1.6 billion in fiscal 2013 to $9.6 billion in fiscal 2023. However, the company has faced stagnation in its North American sales, its largest region by revenue. In its latest earnings report, Lululemon noted slower sales in the U.S., leading to disappointing guidance for the future.
The closure of the Washington distribution center is part of Lululemon’s broader strategy to optimize its distribution network and support future growth. While this decision may result in job losses for some employees, the company remains committed to assisting those affected by the transition. As Lululemon continues to navigate challenges in the retail landscape, it will be interesting to see how its distribution network evolves to meet the changing demands of consumers.
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