GXO Discovers Growth in Reverse Logistics

Strong Financial Performance and Strategic Shifts

GXO, a leading third-party logistics (3PL) provider, reported its highest organic growth in nine quarters, with a 6 percent increase. This growth comes as the company welcomes a new CEO, signaling a fresh chapter for the organization.

Total revenue, when considering acquisitions and foreign exchange rates, reached $3.3 billion, representing a 16 percent year-over-year increase from $2.8 billion in the previous quarter. However, net income saw a decline, dropping to $26 million from $38 million in the same period last year. Despite this, adjusted earnings per share improved to 57 cents, surpassing the 55 cents expected by analysts.

The company has also updated its guidance, increasing its adjusted EBITDA range by $5 million on both ends. The revised range is now between $865 million and $885 million. This upward revision reflects confidence in the company's performance and future outlook.

During a recent earnings call, outgoing CEO Malcolm Wilson highlighted GXO’s success in renewing and expanding contracts with two major customers. One of these was a multi-year agreement with H&M across multiple geographies. Additionally, the company is finalizing a nearly 20-year expansion with a top-15 U.S. retailer.

Diversification of Contract Wins

More than half of the year-to-date contract wins (51 percent) are coming from new activity, marking a significant shift from the 29 percent seen in 2024. Last year, 46 percent of contract wins were secured from competitors, but this year, that number has dropped to 26 percent. Wilson attributed this change to strong momentum in e-commerce.

Levi’s, Puma, and Zalando have partnered with GXO on e-commerce automation projects. According to Wilson, over half of the recent contract wins came from e-commerce sellers, highlighting the growing importance of online retail in the company's strategy.

Growth in Reverse Logistics

Another area of notable growth is reverse logistics, which now accounts for over 10 percent of GXO’s current pipeline. Kristine Kubacki, GXO’s chief strategy officer, noted that reverse logistics also contributes a similar "high-single-digit, low-double-digit" percentage to the company’s revenue.

Kubacki emphasized that the new e-commerce wins are driving demand for reverse logistics. GXO is leveraging artificial intelligence (AI) to enhance its reverse logistics capabilities, aiming to unlock future growth opportunities. She explained that about a third of e-commerce orders are returned on average, which can negatively impact customer margins. AI tools are being used to help customers resell products quickly, thereby improving their margins.

Leadership Changes and Future Outlook

As GXO continues to grow, it is also experiencing changes at the executive level. Patrick Kelleher, a veteran from DHL Supply Chain, will become the new CEO starting August 19. Wilson will not be the only high-ranking member leaving; the company announced that CFO Baris Oran plans to step down, though no specific timeline has been given.

In addition, GXO has added seven new board members since May, with five newly elected at the annual shareholder meeting. Two more were appointed on July 31, bringing the total board membership to 10. Three of the members were reelected during the meeting.

Wilson stated that it is still early to discuss the future direction of the company amid these changes. He mentioned that both Kelleher and the new board members need time to acclimate to GXO’s operations. “I’m sure that things will start to unfold as we begin the planning process for 2026 and beyond,” he said.

Technological Advancements and Expansion

GXO is currently implementing a new ERP system across its three main geographic regions, with phase two already underway in the U.K. The software deployment is set to expand to the U.S. next, followed by continental Europe.

Regulatory approval from the U.K. has allowed GXO to proceed with its $965 million acquisition of Wincanton. As part of the approval, GXO must divest some of Wincanton’s grocery contracts in the U.K.

In June, the company launched GXO IQ, a technology platform that uses proprietary AI algorithms to orchestrate complex actions across inventory distribution, order picking, shipping, and staffing. This innovation underscores GXO’s commitment to leveraging technology to drive efficiency and growth.