GXO Logistics will open a “highly automated” distribution center in Goodyear, Arizona, for customer Abercrombie & Fitch Co.
The center, which will cover approximately 715,000 square feet, will include automation and goods-to-person robotics. GXO (NYSE: GXO) said it expects to employ about 300 at the location, which will be the eighth warehouse, covering a total of more than 2 million square feet of space, that GXO operates in the area for customers.
“We’re excited to expand our partnership with Abercrombie & Fitch Co. in Arizona,” Bill Fraine, GXO chief commercial officer, said in a statement. “This investment is another sign of the area’s vibrancy and talented employee base. We’re looking forward to exceeding our customer’s expectations and adding to their growth, while leveraging our extensive knowledge in the fashion space.”
Goods-to-person robots work collaboratively with humans to speed the picking process and increase productivity while decreasing the amount of walking human pickers must undertake to fulfill orders. Abercrombie & Fitch (NYSE: ANF) has signed a multiyear agreement for the facility, which will also incorporate artificial intelligence, machine learning and intelligent analytics into its design.
The center will serve as the retailer’s new West Coast operations hub. It is slated to open before the end of the year.
“We’re pleased to open this new distribution center in Goodyear; it provides another opportunity to expand our supply chain capabilities in a prime location for the West Coast market,” said Larry Grischow, senior vice president of supply chain and procurement at Abercrombie & Fitch. “We’re looking forward to continuing our partnership with GXO, as the company shares both our dedication to the West Coast market and our commitment to leading-edge logistics innovation.”
Abercrombie saw digital sales increase 39% in fiscal year 2020 ended on Feb. 1, 2021, even as overall sales declined 14% to $3.1 billion.
“For the year, we made significant progress on our key transformation initiatives. We leaned into our infrastructure to grow digital to 54% of annual revenues while utilizing our lease flexibility to take approximately 1.1 million gross square feet, or 17%, out of our base, including eight tourist-dependent flagships,” Fran Horowitz, CEO at Abercrombie & Fitch, said in a press release.
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First-quarter sales jumped 61% at the retailer, which also owns Hollister, Abercrombie Kids, Gilly Hicks and Social Tourist. Online sales accounted for nearly half of total first-quarter revenue of $781.4 million.
GXO was spun out of XPO (NYSE: XPO) this summer. Focused on logistics with a specialization in retail and e-commerce, GXO operates about 850 locations globally. At the time of the spinoff, XPO estimated GXO would generate $1.5 billion in 2022 earnings before interest, taxes, depreciation, amortization and rent. GXO’s existing customers are expected to generate 3% to 4% more revenue in 2022 than they will in 2021, an XPO spokesperson said at the time.
The expectation is that GXO will be able to fully capitalize on favorable macro trends surrounding international logistics, including e-commerce. The company said e-commerce accounts for just 20% of the global retail market but represents a $2 billion sale pipeline for the company.
Only about 30% of global logistics is outsourced, a trend that GXO said bodes well for its business. In addition, only 5% of warehouses worldwide are automated, a level of under-penetration that GXO, which plans to have 3,100 robots and automation systems in its warehouses by year’s end, expects to leverage.
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