Just like Seinfeld or milkshakes from Shake Shack, all good things must come to an end. And after jumping more than 270 points to start the week, the Dow Jones Industrial Average (DJINDICES:^DJI) dropped 114 points Wednesday on some market-movin' fightin' words from the Federal Reserve.
Global shipping company FedEx (NYSE:FDX) announced earnings from the important December-February three-month period that were way off from what Wall Street hoped. CEO (and former Marine) Fred Smith ripped into the weather and online retail companies for the rough performance. The $1.23 profit per share missed analysts' expectations for $1.46 per share, and the stock ended up down only 0.1%, probably because investors were afraid of the tough-talking CEO.
On FedEx's fiscal calendar, the third quarter straddles the important holiday shopping season and the funky post-holiday return/exchange season. Both periods are huge for shipping companies like FedEx (Newman considered retiring from the Postal Service after this brutal season). Unseasonably severe winter weather caused $125 million in extra costs for FedEx. It also took a toll on its reputation. The on-time rate for Christmas Eve deliveries (aka the "Merry Xmas" rate) dropped to 90% from 98% the year before. It's still better than UPS's horrible 83%, but the drop didn't help consumer trust.
But it's those hippies on the West Coast who really ruined your Christmas. The former Marine lectured e-retailers for overall sloppiness with their shipping habits during this holiday season. Smith criticized e-retailers' packaging habits, called out the way they label, and even judged online retailers for promising Christmas delivery when it wasn't going to happen.
The takeaway is that investors seemed satisfied despite the disappointing profits. The stock actually rose after the news before falling with the markets the rest of the day and ending slightly down. Overall sales were up 3% versus last year to $11.3 billion, which is a positive trend and was in line with analysts' hopes. It also emphasized that the future growth plans are stable (barring another polar-vortex plagued holiday season).
- Existing-home sales
- Fourth-quarter earnings: Nike, Swatch
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Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends FedEx, Nike, and UPS and owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.