FedEx (FDX) Reported Mixed Results
04/03/2017 2:50 am EST
FedEx (FDX) reported mixed results for the quarter ended February 28. Sales advanced 19% and EPS fell 6% after increasing 20% and 9% in the prior quarter.
FedEx said some of its largest retail customers shipped fewer packages during the holiday season than forecast, after the delivery giant had ramped up spending and staffing in anticipation of a surge in deliveries.
"We provided capacity that went unused," FedEx CFO Alan Graf said on a conference call. Profit margins fell due to a 26% rise in fuel costs and investments to keep up with e-commerce growth.
FedEx cut its profit projection for the year, but the company expects ground operation investments to pay off over the next three years.
With more people shopping online, the added volume is forcing FedEx to spend heavily to expand package-sorting centers and to automate facilities to handle the extra deliveries more profitably.
Management said the integration of the Dutch parcel delivery company TNT Express, acquired last year for $4.8 billion, is progressing smoothly. Buy at 198.53 or below.