A Giant Distributor Now Announces Unexpected Layoffs in Texas

A giant distributor now announces unexpected layoffs in Texas at two of its facilities, resulting in more than 400 job cuts.

Scrubs maker Careismatic Brands is closing two distribution facilities in Dallas, laying off 404 employees in the process, according to a Worker Adjustment and Retraining Notification Act notice obtained by Supply Chain Dive.

Layoffs are scheduled to start on May 31, with terminations expected to continue afterwards, according to the March 28 letter.

The closures are attributed to “changing business needs”.

“We are taking steps to enhance our distribution model to better meet our business’ needs,” a spokesperson told Supply Chain Dive in an email.

“In connection with this process, we have made the difficult decision to wind down operations at our distribution centers facilities.”

Careismatic, which sells to more than 2,000 wholesale customers including hospitals and Walmart, has faced growing competition in recent years, forcing the company to invest in direct-to-consumer services versus sales to physical retailers.

The California-based company eventually filed for bankruptcy in January reportedly due to supply chain woes, including delays and the rising costs of materials, labor and fuel.

According to the bankruptcy filing, at least one of the Dallas facilities is larger than 1 million square feet.

As a result of the bankruptcy, Careismatic, which relies on more than 1,400 vendors, was asked to pay its critical suppliers and other vendors, according to the document.

The document noted that the scrubs maker owes tens of millions of dollars to its suppliers, including Hong Kong-based Leopard Textiles Holding.

Unfortunately, the healthcare sector has been struggling with higher interest rates, federal regulatory changes, labor shortages and more, leading to ongoing bankruptcies in 2023.

Retail healthcare company Rite Aid, for instance, filed for Chapter 11 bankruptcy in October 2023, owing nearly $140 million to its suppliers.

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Market News Today - A Giant Distributor Now Announces Unexpected Layoffs in Texas.
Market News Today – A Giant Distributor Now Announces Unexpected Layoffs in Texas.

Applications for unemployment benefits now surge to new highs, a sign that the white-hot labor market is starting to cool off.

First-time applications for unemployment benefits rose last week to 231,000, the highest level since August, per CNN.

Thursday’s data also showed that the number of continuing claims, or applications from people who have filed for unemployment for at least one week, was 1.78 million.

That’s an increase of 17,000 from the prior week, according to the Bureau of Labor Statistics.

The latest numbers come less than a week after the monthly jobs report showed the US economy added just 175,000 positions in April, less than economists expected and a steep drop-off from prior months.

US employers have now added an average of 245,500 jobs per month, versus 2023’s 251,000-per-month average.

Still, hiring remains strong. Although the unemployment rate ticked up to 3.9% last month, it’s the 27th consecutive month that the jobless rate has held under 4%, matching a streak last seen in the late 1960s.

Weekly jobless claims data tends to be volatile but, while one week’s worth of data “does not a trend make,” said Chris Rupkey, chief economist at Fwdbonds.

“We can no longer be sure that calm seas lie ahead for the US economy if today’s weekly jobless claims are any indication.”

Company layoffs are picking up, hinting at caution on the part of companies as they weigh the outlook for the second half of the year,” he wrote in a note Thursday.

The Federal Reserve has been battling inflation by raising its key lending rate in the hopes of slowing the economy.

While the labor market has so far resisted those efforts, remaining white hot for the past 18 months despite 11 rate hikes from the central bank, Fed Chair Jerome Powell said last week that demand has “cooled from its extremely high level of a couple of years ago.”

Ian Shepherdson at Pantheon Economics said in a note Thursday: “We’d need to see at least a month of elevated readings to convince us that the trend really has turned.”

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Also Read: A Giant Company Now Announces Unexpected Layoffs in Virginia

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Market News Today - A Giant Distributor Now Announces Unexpected Layoffs in Texas.
Market News Today – A Giant Distributor Now Announces Unexpected Layoffs in Texas.

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3 Comments

  1. Jack

    funny…i live next to this giant and have never heard of them in over 60 years of cohabitation.

  2. Frank Nez

    Leave your thoughts below.

  3. Frank Nez

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