Pitney Bowes is offloading its fulfillment division and a Kentucky warehouse as the shipping and mailing company seeks out more avenues to shed costs.
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Fulfillment services and commerce enablement technology Stord acquired the segment from Pitney Bowes for an undisclosed sum.
The deal expands Stord’s fulfillment network with a new 640,000-square-foot capacity facility in Hebron, Ky., marking the 11 th location for the company in North America, and accompanies the firm’s recent expansion into Europe.
At the start of July, Pitney Bowes substantially increased the savings target for its cost rationalization program—escalating the goals from an initial range of $60 million to $100 million up to a range of $120 million to $160 million. A “meaningful” portion of these incremental savings will be realized over the remainder of 2024, while some initiatives will require efforts into 2025.
The sale of the fulfillment business at Pitney Bowes appears to be a result of the Connecticut-based company’s review of the future of its struggling Global Ecommerce (GEC) segment , which is the company’s business-to-consumer logistics services unit that has not brought in a profit since 2015. Pitney Bowes confirmed in a statement that the fulfillment services business “is a small piece” of the Global Ecommerce business.
Amid announcing the new cost savings goals, the shipping company said the expedited strategic review of alternatives for the GEC segment was in its “final stages.” A day after that announcement, the unit’s president, Gregg Zegras retired from the role. A company statement said existing personnel were expected to absorb the duties and responsibilities associated with Zegras’ position.
The GEC segment was a major point of contention for an activist investor last year in a board battle that ultimately ended in the departure of CEO Marc Lautenbach .
It only took seven months for Lautenbach’s interim replacement, Jason Dies, to follow suit , leading recently appointed board member Lance Rosenzweig in charge of the firm on an interim basis.
Pitney Bowes is still seeking a permanent CEO.
Wall Street initially liked the move when The Information first reported on the news Friday, with Pitney Bowes stock soaring more than 16 percent in after-hours trading. However, the stock fell back to earth during trading on Monday, plummeting 15 percent.
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The company recently opened a 45,000-square-foot pre-sort services operating center serving the St. Louis market, that can process up to 1.2 million mail pieces a day. The location is equipped with advanced sorters and a comprehensive conveyor system, boasting nine loading docks for incoming and outgoing shipments.
As for the buyer of Pitney’s fulfillment division, Stord gets its largest warehouse yet with the deal in place. The site includes significant climate control storage, a pick mezzanine, pallet racking and robotic automation capabilities. This center provides additional middle-of-country, single node coverage and complements Stord’s Atlanta headquarters.
“In this competitive e-commerce environment, brands need to provide their customers with leading checkout and delivery experiences that drive cart conversion and loyalty” said Sean Henry, CEO and co-founder of Stord in a statement. “We are thrilled to continue to support brands with our best-in-class consumer delivery experiences through this additional Hebron, Ky, facility.”
The new fulfillment center already services leading customers of Stord, the company says, and ships over 5 million packages annually. This center continues investments in automation with technologies including conveyance flows, print-and-apply machines, robotics kitting arms, and more to drive efficiency and speed of delivery for brands.
According to Stord, the fulfillment center has 52 dock doors, 15,000 pallet positions, and 136,000 cubic feet of bin shelving, further helping the company serve omnichannel brands from any vertical.
Alongside the Hebron location, Stord now has facilities in Atlanta; Seattle; Dallas; Salt Lake City; Nashville, Tenn.; North Haven, Conn.; Las Vegas and Reno, Nev.; as well as two Canadian sites in Vancouver and Mississauga. Stord recently opened two newly launched centers in the U.K. and the Netherlands.
In April, Stord acquired six of those warehouses when the tech firm scooped up fulfillment services and third-party logistics (3PL) provider ProPack Logistics. The purchase brought Stord’s physical scale to 1.6 million square feet of fulfillment centers, which could ship 25 million direct-to-consumer and business-to-business orders per year.
The fulfillment and warehousing operation is part of a wider technology-driven solution that Stord is looking to expand on, with the company offering a software suite including order management systems, pre- and post-purchase platforms and warehouse management systems.
Pitney Bowes will host its second quarter earnings call on August 8.
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