79 Workers Jobless When Soft Surroundings Closes Distribution Center
Soft Surroundings is closing the distribution center it operates in Mexico, Mo., laying off 79 employees, or 11 percent of headcount, in the process.
It expects to terminate workers from Sept. 1-15 , according to a Worker Adjustment and Retraining Notification (WARN) Act notice the women’s apparel, home and accessories retailer filed Friday with the state of Missouri.
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The WARN notice said employees were notified in writing 60 days before the date of their expected layoff. The affected warehouse workers are not represented by a union. Of the impacted workers, 31 are packers, 12 are processors and 11 are pullers, according to the notice.
Layoffs at Soft Surroundings come a month after another specialty apparel retailer, The Children’s Place, cut 181 jobs, or 17 percent of staff. PVH Corp. also said in a regulatory filing last month it was laying off an undisclosed number of workers through the third quarter to reduce “people costs” by about 10 percent.
Soft Surroundings’ 300,000-square-foot facility, which was built in 2016, filled customer orders to all 50 U.S. states and Canada, and distributed product to its retail stores nationwide.
“Over the course of the past year, Soft Surroundings has done a lot of work to assess the company’s core needs and realign our priorities,” a company representative told Sourcing Journal. “With many months of due diligence, assessment and internal conversations, we’ve decided to improve our processes, streamline our logistics and ultimately better serve our customers by partnering with XB Fulfillment. This means that we will be proceeding with the closure of our fulfillment center in Mexico, Missouri.”
The spokesperson said Soft Surroundings wants to ensure sure that it keeps growing and investing in Missouri going into the future, noting that it has provided residents with “clear communication over an extended timeline, held job fairs and have supported recruitment and relocation for staff wherever possible.”
The women’s lifestyle brand, which sells apparel, shoes, accessories and handbags plus home goods and wellness products, is undergoing an “aggressive new repositioning” as it refocuses on what it calls the “forgotten consumer,” Gen X women. The digitally driven mission comes after executive chair Bridgit Lombard took the interim CEO reins in March.
As part of the overhaul, Soft Surroundings now has about 65 percent less inventory since Lombard started calling the shots. In a May press release, the company said it’s focused on “offering the styles that their core demographic of women over 50 are gravitating towards most.”
Soft Surroundings started as a catalog retailer in 1999, and operated an e-commerce business before opening its first retail store in St. Louis in 2005. The retailer expanded to more than 70 stores across the U.S., but has since shrunk to 44, according to the firm’s website.
Despite the massive downsizing, Soft Surroundings’ sales fell just 15 percent in the time frame, the company told the St. Louis Business Journal. Fewer stores enabled the company to tighten its focus on assorting products that appeal to new Gen X target customers.
In May, the retailer revamped its leadership, staring with a new chief financial officer, Dan Karpel, who formerly held the same position at supermarket Save-A-Lot and previously served as chief accounting officer at Caleres.
Karpel’s appointment was one of four that Soft Surroundings described as part of the brand’s repositioning. The retailer appointed Kyle Madson as its vice president of global sourcing, technical design and quality, Amber Larson as its vice president of merchandising and Karen Tweedie as its new head of design.
Soft Surroundings implemented Shopify POS in stores to bridge the digital and physical gap. The retailer is also in the process of moving its e-commerce site to a new platform but hasn’t revealed details.
The closing of the distribution center comes as warehouse vacancy rates continue to rise. According to commercial real estate firm Cushman & Wakefield, vacancy rates have jumped to 4.1 percent in the second quarter, up from 3.5 percent in the quarter prior. This marks the first time since mid-year 2021 in which the rate exceeded 4 percent. The firm expects warehouse vacancy rates to climb further to 5.5 percent through 2024.
Retailers like Stitch Fix and Big Lots are getting rid of DCs, with the former closing a Pennsylvania fulfillment center in October and another in Dallas next year. In the case of Big Lots, the home décor and furniture retailer already closed four forward distribution centers in Georgia, Pennsylvania, Washington and Indiana.
Both retailers benefitted from the e-commerce boom during the Covid-19 pandemic, but needed to cut costs, with Stitch Fix saying a consolidated fulfillment network would better position inventory closer to consumer demand.
Soft Surroundings is owned by Los Angeles-based private equity firm Brentwood Associates, whose portfolio also includes Boston Proper and J. McLaughlin. It employed about 700 as of May, with 150 positions based in the retailer’s St. Louis headquarters.
