UK activewear company Gymshark is ceasing most US operations at its Denver HQ and laying off 65 employees this March.
After opening the US office in 2021 (its fifth worldwide) to aggressively pursue the American market, the billion-dollar DTC brand is pulling back amid changing economic conditions.
“We are taking this move purely for commercial reasons to centralize our operations and continue to safeguard the future of the business.”
Growing pains. Built on authentic branding and an established online presence, Gymshark achieved unicorn status in 2020. But, the company has experienced its share of stop-and-go since.
- Last spring, the company cut 121 jobs, citing redundancies.
- Last fall, it opened its first retail store on Regent Street.
- As inflation ticked up in the UK and abroad, the company explored cutting costs with cheaper apparel.
Notably, Gymshark makes half of its revenue from North America. Doubling down, it announced its Denver HQ back in 2019, but the pandemic delayed its opening by nearly two years. Now, it appears to be rethinking expansion.
Why it matters: Rising inflation and economic uncertainty have slowed consumer retail spending in both the UK and in the States — 50% of US consumers say they will buy fewer items, with 20% saying they will downgrade to less expensive brands.
And that’s not good for activewear, evidenced by lululemon’s slipping margins, Allbirds’ layoffs and activewear liquidation, and Nike’s “seasonally late” apparel.
What to watch for: lululemon, Gap’s Athleta, and On Running all launched apparel resale programs last fall. As brands sort out excess inventory, expect more to buoy their business on existing product… with further layoffs not out of the question.