Though the holidays and their emphasis on packages are almost behind us, FedEx
Soon, FedEx will offer its shipping options in 1,200 Kinko's stores (it currently has outlets in 134 Kinko's stores through a pre-existing agreement). The acquisition will help FedEx grab shipping business from the small- and medium-sized business market as well as from consumers who have fulfilled their other document needs in the stores.
Kinko's has been branching out from its humble beginnings as a copy center. It's no longer just about producing brochures, manuals, and business cards. Now, it offers its business customers some pretty fancy solutions in many of its locations, including Wi-Fi Internet hot spots and videoconferencing. For 2003, Kinko's expects to report $2 billion in revenues (though the acquisition won't add to FedEx's earnings until fiscal 2005).
With the high price tag comes the expanded retail presence and high-profile name brand that seems sure to usher in some built-in customers for FedEx. Over the last several years, the delivery company has suffered from a sluggish shipping business as the economy took a nosedive, and from heated competition from rival UPS
Earlier this month, Fool LouAnn Lofton reported on FedEx's lackluster second quarter. A higher-than-expected number of employees jumped at the chance to take FedEx up on its early retirement package, resulting in a charge.
While the Kinko's acquisition might be a good idea, it's not original. In 2001, UPS bought Mail Boxes Etc. for about $185 million, a franchise that currently has 4,000 locations. With the possibility that UPS is indeed winning the market-share battle, one might wonder what took FedEx so long to tap into this market. However, by capitalizing on Kinko's well-known brand and non-franchise stores, the deal could deliver some excitement to FedEx shareholders.
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