Star shipper, premier packeteer, and prized Motley Fool Stock Advisor recommendation FedEx
And before I forget, let me say: "It's your own danged fault, FedEx." Had the company not deep-sixed the Kinko's brand name earlier this month, FedEx would actually have earned a profit in Q4. To this Fool's mind, the name change was utterly unnecessary, and did nothing to fix a business unit that currently lags Staples
So how bad was it?
On the off chance you've missed the dozens of stories that poured out of the financial press in the wake of FedEx's earnings release (hey, we're between earnings seasons, and it's a slow news month), here's a quick rundown:
- Back out the one-time impairment charge that torpedoed net profits, and FedEx's core business would have earned $1.45 per share in fiscal Q4 2008. Not only would that have marked a 24% decline versus fiscal Q4 2007, it also would have fallen 9% short of FedEx's previous guidance to earn no less than $1.60 per share.
- And yet, business was actually up, when measured by revenue. Sales for the quarter came in 8% higher than last year at just under $9.9 billion.
So how did FedEx translate 8% more business into 9% less profit than its own worst-case scenario? CEO Fred Smith blamed "record high fuel prices and the weak U.S. economy" for crimping growth in volume of packages shipped. Record fuel prices we all know about. As for the economy's effect on shipping, we'll check and see if UPS
In other words, U.S. shipments shrank, which suggests bad news may be in store for the many U.S. companies that use FedEx to get their goods into customers' hands -- companies like Green Mountain Coffee Roasters
Keep track of FedEx's recent earnings news: