Both Lululemon and Nike announce layoff

Recently, yoga apparel brand lululemon announced the layoff of 128 employees starting June 21st. The reason is the opening of a large new warehouse in the outskirts of Los Angeles, USA, and plans to close a distribution center south of Seattle. The retailer has formally notified the local employment security department.

A spokesperson stated that the facility is expected to close by the end of this year. "Although some employees will be retained and transferred to other units, including our recently opened distribution center in the greater Los Angeles area, this optimization will result in a reduction of over 100 positions at the existing Sumner distribution center. We are focusing on assisting the affected employees through this period."

According to securities documents, lululemon opened its first warehouse in Sumner in 2010, which was the first large distribution center the company opened in the United States after going public in 2007.

Over the past decade, lululemon has dominated the activewear sector and become one of the most popular brands among young people. Its annual sales grew from $1.6 billion in the fiscal year 2013 to $9.6 billion in fiscal year 2023. However, recently, lululemon's growth in North America (its largest sales region) has begun to slow. In the three months ending January 28, 2024, the company's sales in the Americas increased by only 9%, compared to a growth rate of 29% in the same period last year.

Recently, Nike announced that it would lay off approximately 740 employees at its global headquarters in Oregon. The sportswear giant had previously warned that its revenue for the first half of the fiscal year 2025 might decline and that cost control measures were needed.

Michele Adams, Vice President of Human Solutions at Nike, has issued a legal notice to state authorities indicating that the "second phase impact" will begin at the headquarters on June 28th. This layoff plan is part of Nike's $2 billion cost-saving plan announced last December for the next three years. In February of this year, the company also stated that it would reduce its global workforce by about 2%, or more than 1600 positions.

Previously, Nike had stated in March that it expected a low single-digit percentage decline in revenue for the first half of fiscal year 2025 due to plans to reduce certain franchise operations. Market analysts believe that this layoff may be one of Nike's important measures to address the downward trend in revenue.