FedEx's Strange Delivery

Nothing confuses me more than when a company puts gratuitous fluff into an otherwise solid press release. It's just plain annoying. Especially when a stalwart like Motley Fool Stock Advisor pick FedEx (NYSE: FDX  ) does it.

Allow me to explain. In a press release issued yesterday, FedEx said it would be raising shipping rates an average of 3.5% in 2006. It also said it would be rolling out new rates for those who use its retail locations. (FedEx owns Kinko's.)

The release said the price increase is a combination of an average 5.5% boost in its list rates, offset by a 2% reduction in its fuel surcharge. Sounds fair to me. So why, then, this quote?:

"This reflects our continued commitment to invest in our business in order to meet and exceed new customer expectations," said T. Michael Glenn, FedEx executive vice president, Market Development and Corporate Communications. "Enhancing our operations and services gives our customers greater ability to better manage their supply chains and improve their competitiveness."

So you're telling me a price increase will help your customers be more competitive? Yeah, OK, maybe in 10 years after you've fully reinvested the proceeds. But does that really matter today? Not really. Let's just please call this what it is -- a price increase.

Besides, the news should be that FedEx's willingness to raise prices in a highly competitive industry is indicative of a very strong business. Or one that's seen price competition from its main competitor, UPS (NYSE: UPS  ) , wane significantly. Either way, it's a good sign. And it gets better when you consider that FedEx just reported a 10% increase in sales and an expanding operating margin (after accounting for non-cash charges). That's pretty impressive, considering the macroeconomic conditions in which the company operates. Which is also what makes the idea of press release shenanigans -- intended or not -- all the more stupid.

As a former PR guy, I've written enough stinky press releases in my time to know that sometimes management gets overzealous. So let's chalk it up to misguided passion. Besides, the reality at FedEx isn't too bad.

Don't wait by your mailbox for the FedEx truck. We've got related Foolishness right here:

FedEx is a Motley Fool Stock Advisor pick. For a 30-day free trial to the best of Tom and David Gardner's picks, click here.

Fool contributor Tim Beyers uses regular old Priority Mail as much as possible. He's just cheap that way. Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out what's in his portfolio by checking Tim's Fool profile here. The Motley Fool has an ironclad disclosure policy.


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