Americold adds to belt-tightening initiatives

Cold storage warehouse operator Americold Realty Trust announced it has expanded its cost-takeout efforts. Its new “Fit for Purpose” initiative aims to reduce overhead expenses by more than $25 million annually.

Americold (NYSE: COLD) expects to achieve one-third of the annual cost-savings run rate this year, with full program implementation occurring by the end of the first quarter. (The company’s full-year earnings guidance calls for core SG&A expenses of $218 million to $228 million.)

“Driving a simpler, more cost-efficient overhead model is one of our Strategic Priorities for the year, leading to increased agility and collaboration,” said Americold CEO Rob Chambers.

The announcement comes amid widespread belt-tightening across the industry, as persistent food cost inflation has pushed carrying costs higher, limiting the amount of inventory customers will hold. Further, the cold storage leasing market has been hampered by a capacity overhang following significant facility development during and after the pandemic.

The company has made numerous investments in hiring, training, retention, employee development and technology over the past few years, which it believes will begin to more meaningfully lower its cost structure.

The latest initiative complements existing initiatives aimed at reducing indirect labor and selling, general and administrative expenses by $30 million, and project spend by $50 million.

“Through the Fit for Purpose initiative, we intend to maximize the benefits of the investments we’ve made to drive clearer accountability, faster execution and stronger performance across the organization,” Chambers said. More FreightWaves articles by Todd Maiden: Could Yellow Corp. workers finally get paid?

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