It’s been another week with far more retail news than there is time in the day. Below, we break down some things you may have missed during the week, and what we’re still thinking about.
From the future of TikTok to Amazon expanding drone delivery in Arizona, here’s our closeout for the week.
What you may have missed
Lululemon lays off 128 employees as distribution center closes
Lululemon is laying off 128 employees in Sumner, Washington, according to a WARN notice filed in the state. The layoffs will begin on June 21, per the notice, which was filed last week. Lululemon confirmed the layoffs were due to the closure of one of its “smaller distribution centers,” which is intended to take place at the end of the year.
“As we continue to deliver on our growth strategy to meet the needs of our guests, we regularly evaluate our distribution network to help shape and support the future vision of our business. Following a review of our current infrastructure and the evolution of our fulfillment strategy, which includes a multi-year investment to increase overall capacity and support our growth, we have made the decision to close one of our smaller distribution centers – located in Sumner, WA – at the end of 2024,” a company spokesperson said via email.
The spokesperson added that some employees will be retained and relocated to other facilities, including a Los Angeles distribution center that recently opened.
“We are committed to supporting our impacted employees through this transition,” the spokesperson said.
Amazon to expand drone delivery in Phoenix, end service in California
About two years after launching drone delivery in Texas and California, Amazon said this week that it plans to begin offering Prime Air drone delivery from the Phoenix-area suburb of Tolleson, Arizona, later this year. The company last year began delivering prescription medications to customers in College Station, Texas.
Amazon plans to fly delivery drones from facilities next to its same-day delivery site in Tolleson. The company’s same-day delivery sites are near large metro areas and offer connections to larger, nearby fulfillment centers. Amazon said it’s currently working with the Federal Aviation Administration and local officials in Tolleson to obtain permission to conduct drone deliveries.
However, as the Arizona site opens, the company confirmed it plans to close its Lockeford, California, drone delivery site. Amazon said all employees there will be offered job opportunities elsewhere.
Mango opens in Boston and DC
Spanish retailer Mango is continuing its stretch into the U.S. with locations in Washington, D.C. and Boston, according to a Monday press release. The brand already has locations in New York, Florida, Texas, Georgia, California and Pennsylvania.
“We are thrilled to be expanding in the U.S. with our new stores in Washington, D.C. and Boston, two key markets on the East Coast,” Daniel López, Mango’s director of expansion and franchises, said in a statement. “This is a very exciting time to be at Mango and we will continue executing on our plan to bring the brand experience physically to more U.S. consumers. These openings are the first of several and we look forward to sharing more on our progress as the year goes on.”
Mango opened a Maryland location at Westfield Montgomery mall on April 14 and is planning for four stores in the Capitol Region; at 950 F Street, in downtown D.C.; at Tysons Corner Center in Virginia and at Pentagon City in Virginia. The company will also open two additional stores in 2024 located in the Boston area, after debuting at the Natick Mall on April 22.
Per the release, Mango is aiming for 40 company-owned stores by 2024 in the nation.
Retail therapy
Spirit Halloween says chop chop
In honor of the upcoming midway mark to Oct. 31, Spirit Halloween is throwing a weeklong celebration that culminates in a chance to win a private stay in the Lizzie Borden House.
One winner and 12 of their friends will have a guided tour, among other gifts and prizes like a ghost hunting lesson, at Borden’s infamous home in Fall River, Massachusetts. Borden was tried and acquitted of the 1892 murder of her father and stepmother in the home with an axe.
“Our Halfway to Halloween celebration provides fans an exhilarating taste of what’s to come this fall and empowers them to start planning for their favorite season as early as they please,” Steven Silverstein, CEO of Spirit Halloween, said in a statement.
Levi’s takes ‘go big or go home’ literally
Levi Strauss & Co this week debuted custom pairs of 12-foot-tall Levi’s Giant 501 Jeans at five malls across the U.S.
Image courtesy of Levi Strauss & Co
Through May 20, Levi’s Red Tab Loyalty program members can take a picture of themselves in front of the display and receive 40% off one pair of regular priced 501 jeans.
A pair will be on display in Nashville, Tennessee; Rancho Cucamonga, California; Columbus, Ohio; Miami and Honolulu.
What we’re still thinking about
11%
That’s how much Sleep Number’s net sales declined year over year in the first quarter, to $470.4 million. At the same time, gross profit fell 11% to $276 million. Operating income contracted 78.6% year over year to $5.5 million, while the company reported a net loss of $7.5 million from a net income of $11.5 million last year.
The sleep company reiterated its financial outlook for the year, projecting net sales to decline in the mid-single-digits and for gross margin to improve by about 100 basis points. Sleep Number also anticipates $14 million in restructuring charges for the year. Capital expenditures are expected to be $30 million, and the company projects to generate between $60 million and $80 million of free cash flow.
Sleep Number in February landed on Retail Dive’s list of digitally native companies that could file for bankruptcy within 12 months and carried a FRISK score of 1, which denotes a 10% to 50% chance of filing for bankruptcy. The company’s FRISK score currently stands at a 2, which signifies a 4% to 10% chance of filing for bankruptcy.
$43,888
That will be the new minimum annual salary threshold to qualify for overtime pay, the U.S. Department of Labor said on Tuesday. The threshold will be increased through a two-step process over the next eight months, according to sister publication HR Dive.
Starting July 1, the threshold will increase from $35,568 to $43,888 per year. Broken down over 52 weeks, that’s equivalent to $844 per week for a full-time, full-year worker. On Jan. 1, 2025, it will increase to $58,656, equivalent to $1,128 per week.
The DOL will automatically update the threshold every three years using current wage data. The next adjustment would occur on July 1, 2027. The new rule would impact 4.3 million U.S. workers, according to the Economic Policy Institute, or 3% of workers subject to the Fair Labor Standards Act.
Two key retail industry groups expressed concerns over the impact the rule change would have on workers and managers. The National Retail Federation cautioned the change could strip the industry of future leaders as “millions of retail managers will be demoted from exempt to non-exempt positions” and lose employment benefits, during last November’s public comment period.
On Tuesday, the Retail Industry Leaders Association issued its own statement warning that the new rule could hinder advancement opportunities for workers.
What we’re watching
What is TikTok’s next chapter?
President Joe Biden signed a bill this week that will force TikTok’s parent company, ByteDance, to divest its U.S. operations or face a nationwide ban.
TikTok released a statement calling the law “unconstitutional” and said it would be challenged in court. “The fact is, we have invested billions of dollars to keep U.S. data safe and our platform free from outside influence and manipulation. This ban would devastate seven million businesses and silence 170 million Americans,” the company said in a statement.
TikTok supports over $24 billion in gross domestic product and over 224,000 U.S. jobs, according to the company.
