Contract logistics provider GXO Logistics Inc. cut its full-year guidance for organic revenue growth as a weaker-than-expected peak season cut into top-line activity.
Despite that, Greenwich, Connecticut-based GXO (NYSE: GXO) beat Wall Street’s third-quarter forecasts by 3 cents a share with adjusted diluted earnings per share of 69 cents. The EPS figure beat the company’s own estimates by 4 cents per share. GXO posted adjusted diluted EPS of 75 cents per share in the third quarter of 2022.
Organic revenue growth for 2023 was revised to a range of 2% to 4%, down from 6% to 8%, the company said. Executives told analysts Wednesday morning — results were released late Tuesday — that the consumer market vertical is weak and will remain that way through the fourth quarter. Other verticals like information technology and food service are holding up relatively well.
CEO Malcolm Wilson said that GXOs continental European markets are “doing OK,” while its U.K. business is “at the bottom” of the currency cycle and the North American business is nearing a bottom.
GXO is not expecting a spike in seasonal warehouse activity this peak because inventories are well supplied and consumers remain cautious about their holiday spending, Wilson said.
Third-quarter revenue grew 8% year over year to a record $2.5 billion, while organic revenue rose 3%. Operating income grew 25% to $90 million, while adjusted net income fell to $82 million from $89 million.
The company said it has won $841 million in new business year to date. In the third quarter, the company won $181 million in new business, with nearly half coming from companies outsourcing their logistics operations for the first time.
GXO closed its $181 million acquisition of luxury goods fulfillment provider PFSweb on Oct. 23. The transaction puts GXO in new niche verticals. Company executives would not comment on any future M&A activity but said the PFSweb deal would serve as a template for future deals that it would like to pursue.
Near midday Wednesday on the New York Stock Exchange, GXO shares were trading 3.4% higher at $54.10.