We’re no UPS!

FedEx: “We’re no UPS!” Stock market: “Meh”

The competing package-delivery company issued a succinct statement meant to reassure investors: We’re sticking with our forecast for 2015 profit. FedEx Corp.’s (FDX) per-share earnings will be $8.50 to $9 this year, same as the company said before. That assumes moderate economic growth and a modest benefit from falling fuel prices.
The message was clear. FedEx wants to avoid being compared with United Parcel Service Inc. (UPS), which suffered after spending a fortune to ensure that packages get delivered on time during the year-end peak-demand season. Sure, UPS avoided the delays that marred the 2013 holiday. Even so, margins were crimped by all those increased expenses for a system that wasn’t fully utilized some days.
FedEx is different from UPS in key ways. It has a smaller domestic network than Atlanta-based UPS. It’s more focused on international markets, where air freight shipments have strengthened recently. FedEx also didn’t undertake as costly a network overhaul as UPS. Even if Memphis, Tennessee-based FedEx had its own cost overruns, the impact was blunted.
FedEx’s statement failed to reverse the slide in its shares, which slipped as much as 2.8 percent today.

www.bloomberg.com

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