Lululemon to start layoffs from June 21st

Recently, lululemon announced the opening of a large new warehouse in the outskirts of Los Angeles, USA, and plans to close its distribution center in Washington by the end of this year, starting layoffs of about 128 employees from June 21st. It is worth noting that the lease for the closed distribution center will expire in July 2025.

Over the past decade, lululemon has dominated the athletic apparel sector and become one of the most popular brands among teenagers, with its annual sales growing from $1.6 billion in fiscal year 2013 to $9.6 billion in fiscal year 2023. As of January 28, 2024, lululemon's fiscal year 2023 revenue increased by 19% to $9.6 billion, with a net profit growth of 81.35% to $1.55 billion and a gross profit margin of 58.3%. The net revenue in the North American market increased by 12% to $7.632 billion, by 67% to $964 million in the Chinese market, and by 43% to $1.024 billion in other markets.

lululemon operates in over 25 countries globally, with the majority of its revenue coming from the United States, accounting for about 80%. In the fourth quarter, revenue in the US market increased by 9%, compared to a 29% increase in the same period last year, indicating a significant slowdown in growth. The company has cited lower-than-expected revenue and profits mainly due to weakened demand for high-end athleisure products in North America.

Despite the sluggish market environment, investors' expectations for this dark horse are continually rising. Meeting the high market expectations poses a certain challenge for lululemon. Rather than relying on hopes for a turnaround in the future market, lululemon has decided to proactively seek change. The company's first step is to target optimizing inventory levels.

As of January 31, 2021, the company leased and owned 1.12 million square feet of distribution centers in Canada and the United States. By the end of January this year, the distribution center's area had expanded to nearly 4 million square feet. Additionally, lululemon CEO Calvin McDonald stated that "2024 will see the launch of the brand's first-ever menswear line, covering various categories and sports fields."

In addition to lululemon, previously, Nike, Levi's, H&M, Canada Goose, and Amazon have all undergone rounds of layoffs.