Dive Brief:
- Ryder System recorded an asset impairment charge of $30 million in Q1 in relation to Bed Bath & Beyond’s bankruptcy, hurting the logistics and transportation provider’s earnings again, executives said Wednesday.
- The charge is related to devaluing equipment used in a Pennsylvania warehouse. Ryder provided distribution management services for Bed Bath & Beyond, which recently filed for bankruptcy.
- Ryder previously noted an asset impairment charge of $20 million for Q4 due to an early termination for the retailer’s distribution center in California.
Dive Insight:
CEO Robert Sanchez said on the earnings call that Ryder decided to take on Bed Bath & Beyond’s business when the retailer was in better financial shape.
While Ryder’s supply chain unit was impacted by weaker retail demand in Q1, Sanchez noted that the costs associated with the loss of Bed Bath & Beyond were unique due to the changing credit profile that unfolded.
Sanchez noted that the client’s credit profile is not typical of its supply chain business customers.
“Their credit was a little bit softer than what we normally would go with,” Sanchez said in a February earnings call. Bed Bath & Beyond didn’t immediately respond to a message seeking comment.
With the write down, Ryder once more plans to redeploy the equipment
Despite the setback and a weakening freight market, Ryder’s Supply Chain Solutions’ segment operating revenue soared last year to $3.25 billion, a 47% growth YoY, according to the company’s 2022 annual report.
In Q1, Supply Chain Solutions’ operating revenue increased 19% YoY for the quarter to $879 million. That marked the highest percent increase across business segments, too.
Leading the charge was growth in the supply chain segment’s U.S. customers, which increased from 401 to 669 accounts. The company also noted increased near-shoring activity among automotive and industrial verticals is helping Ryder México.
