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FedEx Misses Across The Board, Guides Lower, Cuts CapEx Spending Forecast - Blames It All On Weather
Remember when in what at the time was the ultimate #Ref! moment, in January UPS missed and guided lower due to a, drumroll, surge in business resulting from "an unprecedented level of online shopping that included a surge of last-minute orders." Yes, not only was it the weather's fault the company had a surge in business and shipments, but the company actually missed and guided lower due to this surge? Moments ago it was FedEx' turn to miss Q4 revenues and earnings across the board, and to guide lower due to, what else, the weather.
Specifically:
- Q4 ESP was $1.23, Exp. $1.46
- Q4 revenues $11.3 billion, Exp. $11.43 billion
- Reduced full year EPS guidance: projects full year EPS of $6.55 to $6.80 for fiscal 2014.
Here is what the company scapegoated the miss on:
"Historically severe winter weather significantly affected our third-quarter earnings,” said Frederick W. Smith, FedEx Corp. chairman, president and chief executive officer. “On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high. The FedEx strategy of maintaining separate express and ground networks with multiple hubs proved to be an especially important advantage for our package customers during this quarter’s severe weather and peak shipping.”
But wait a minute, according to UPS the abnormal weather was a reason for surging shipments? Now FedEx is saying the opposite - so who's lying?
Also, it wasn't all weather. "Results also include a negative net impact from fuel." Specifically, "Revenue decreased slightly due to lower freight revenue, lower fuel surcharges and the impact from weather. U.S. domestic revenue per package was up slightly, as higher rates and weight per package were mostly offset by lower fuel surcharges."
Finally, one can surely attribute the fact that the company now plans to spend less CapEx in 2014 than earlier predicted - something we have been warning about for months - on the weather. To wit: "The capital spending forecast for fiscal 2014 is now $3.8 billion, down $200 million from the previous forecast." Because one never invests in their business whn it's snowing...
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Thank goodness it's just the weather......and not the economy!
Has NASA put out the doom global warming report yet? Heard it was coming....but I haven't been paying attention.
Oh BULLSHIT! If anything, bad weather should have forced moar people to shop on-line instead of venturing out into the bitter cold to a big box store!
So FedEx should have gained moar shipments.
UPS thought ahead.....and bought snow tires. They're whoopin FedEx's ass.
Well they took tarp money too.
Sorry, but there is no shipping involved when everyone is taking there free cash flow, that is ever rising as their wages keep increasing, and buying stocks.
The SAD news is that FEDEX will go up on this news....fucking nuts
Yep. I would order online rather than going out if the weather was bad. If anything it FedEx and UPS should be up big.
Well, they lose money on every sale, but they make up for it with volume.
Their stock prices are WAY up. Go figure...
Holy Cow...they're blaming it on the weather?
As much as I hate the USPS....I was driven to them by the insane prices of UPS and FedX for international shipments.
So, as long as USPS is selling below cost (thank you taxpayer) I'll blame the them.
Had several shipments delivered to me at work these past few months via FedEx. Most of the shipments were urgent so I would stare daily at the screen for updates. Multiple shipments had 'red' updates in the tracking page that said FedEx was experiencing dailsy due to weather....even though my packages didn't come from the northeast or midwest (snow) and Memphis was sunny and balmy....
Was this an opportunity to cut 'assets' involved in deliveries (such as planes and fuel) and push up the inventory in the system to gain increased efficiencies from full cargo holds? I found it interesting at the time....now it looks like an excuse to try and get more $ into the system.
IT'S THE "WEATHER" STUPID!
You mean "whether". Whether or not they want to use this excuse or that excuse.
I can in fact confirm it is the weather. I own and operate 15 FedEx routes as an independent contractor, of which some of that business is Line Haul (tractor/big rigs) that carry the freight. We were constantly being dispatched to different spots where roads were open, much different than my dedicated contract run. There were days in which trailers were stuck east of the Sierras and we had no way to get to them. That slowed my home delivery and ground business down substantially. I have routes in the Bay area that saw the daily package volume drop to 220 stops compared to the usual 320. The past few weeks, I have seen the package volume rebound to normal levels. Today, one route I have in mind is sitting at 370. If you don't think it was "the weather" last quarter, then I can tell you for certain the economy must have REALLY picked up these past two weeks.
Thanks for the reality check.
@NoLongerABagHolder
Are you confusing delivery issues with user demand? If the rigs couldn't get to you, it suggests that there was a distribution breakdown, not a sales breakdown. I'd be curious to know how many "refunds" were offered. That might tell us something about user demand.
"FedEx said unusually severe winter storms disrupted operations, decreasing shipping volume and increasing costs."
All I can say is that I can confrim this statement. Just looking at one of my weekly settlements for one of my busiest terminals, the weeks of 1/31 and 2/7 saw settlements that were historically low. Those weeks usually see higher than average income for my business, and yet they were 5-10% lower than last week which is not a "peak" weak. Mothers day also is a much busier than normal day, and this year I had trucks that were not being dispatched to RENO from SACR because we couldn't get there or wouldn't be timely due to weather. Usually we are still seeing decent volumes from peak season as packages are returned from Christmas. The terminals hired more sort crew for the belt lines, but the trucks were not there to sort packages. We also hired more temp drivers, but didn't have the volume, so the guys had short routes those days. If we run a supplemental truck, FedEx still pays us a .26/mile settlement for gas. So we had increased costs, and FedEx paid out increased mileage even though the packages were not there. I could have easily not run the supp, and my costs would have been down, as would FedEx. I can imagine I was not the only contractor to run supps in anticipation of volume that never arrived to the terminal because trucks did not make it.
CEO Fred Smith added, "On days when the weather was closer to normal seasonal conditions, our volumes were solid and service levels were high."
I would say this is a true statement. I have the daily package/stop statements that prove this to be the case. I can also confirm that my package volume is back to historical norms these past two weeks.
Not sure what else I can tell you. Keep in mind that historical norms can still be a "slowdown" as internet business eats away at brick and mortar business. But from a FedEx standpoint, we are back to being busier than we were during peak, and peak is supposed to be extremely busy. There was an underlying theme throughout my routes...... couldn't get trucks to the terminals.
Thanks for your "boots on the ground" report! I sit corrected and I'm glad that FedEx and its crew like yourself are rebounding.
CORRECTION: Valentine's day, not Mother's Day. Thanks Headbanger! We are as well. having 20 employees to pay is always a constant worry!
Still trying to correlate how delayed delivery affects the actual sales. Had no problem getting to my computer to place orders.
Costs are easy. I can have a driver do 100 stops easy in a day. If I was expecting 150, I would run a temp/supplemental driver. For that extra truck, FedEx will pay mileage. If the normal route was 100 miles for the day, FedEx would pay $26. If the volume was not there, and I had two trucks running 100 stops, my mileage would not double, but would increase (both traveling to and from terminal) say 30 miles. That means the gas settlements would increase the cost to FedEx by 30% for that expense. I imagine they did the same thing for their company owned Express routes.
Income wise, I own tractor/trailer routes that go to large customers like Harry and David or Sports Authority and pick up their orders daily. We weren't able to get to those customers on certain days, thus FedEx could not book the revenue. Basically these large retailers keep an empty FedEx trailer at the warehouse that they fill for daily delivery to the terminals to be sorted. These trailers were piling up, thus their orders were behind. IF there were refunds, it could have been at the retailer level since the packages were delayed for days/weeks on end.
Thanks for the clarification.
Global Warming!
The horror......the horror!
Wouldnt bad weather cuase people to stay home and order things online??? Americans need their junk.
They did.... problem was their online orders were stuck in terminals or at truck stops because we could not get to or move the freight.
But doesn't the customer pay on order....not delivery?
I think the point is, the problem isn't with revenues, it is with costs, which rose due to the weather
and eventually everything is shipped regardless of the weather. So, only demand would make FedEx miss not the fact that the deliveries were slow.
fukkin weather dudes, get with the program...algos, green!
This can mean only one thing..... Time to bust out my DOW 17k hat.
FedEx must expect bad weather all year since they reduced 2014 EPS.
FED EXpects good weather all year since they are TAPPERING!
Is that some kind of shoe dance they do on the sidewalk when delivering packages?
It's a good thing we only have weather in the fourth quarter and none in the other three. Next up Fedex misses first quarter do to the Ukraine.
What amazes me is gas is $3.90 a gallon and the economy sucks. I would imagine if the economy was ripping gas would probably be around $5-6.
you don't want to know how much a gallon costs in the eurozone
not that long ago the typical US discussion was that gas prices determine if the economy does well or not. and military hawks patiently explained that moar defence budget results into lower gas prices, which then makes the economy soar and therefore payment of debts easier
I understand that Europeans pay $10-11 US for a gallon of gas. Here in America however we had a tax that's called the defense budget. Add in trillions spent on our two wars in the middle east, and as you can see in the long run we're all paying about the same price.
They have gas taxes over there that no one even knows the name of.
Fix the weather Al Gore you fat fucking slob!!!!
As long as its the weather and not crappy management then I'm OK w it.
... only thing that really matters is amount of share buy-back ...
is this good for the only 2 forms of real money????
it msut be right...?
sarc/off
I saw that it might rain today. I hope it doesn't screw up the economy.
It's the smog in China..... Digital storms on the internet that prevented people from ordering. We'll think of some other excuse.
You think they'd invest in some fu----- snow shovels, at leat.
Make Punxsutawney Phil the new CEO ...Pay it 20 million nuts per year.
got a "smart meter" yet, I refused to get one installed, the elec co is not happy...but this just in , AM radio here in Maryland is reporting many who got the meters are getting hit with $100 plus incr in elec bills, but me I got a bill last month for $35.00 about $130 less than usual, thanks meter reader guy for giving me a break as those guys know it's hard heads like my family that are keeping their jobs ....wonder what these incr elec bills are doing to amazon sales and fed ex del?
My big thing is the BUYBACKS.....NON-STOP BUY BACKS OF COMPANY STOCK.
It sure helps the market, no doubt, but WHAT HAPPENS WHEN ALL THOSE SHARES, NOT JUST FDX, ARE UNDERWATER?
No Capex, ONLY BUYING STOCK.
this will get good.....trust me
I checked, there is going to be WEATHER today. Damn. Earnings will take a hit.
I'm really tired of hearing this shit about "the weather".
I live in NW Montana. The winter weather here is ALWAYS bad yet people here carry on in spite of it. I use FedEx Ground service frequently--mostly between here and Billings. FedEx Ground delivers within the entire state of Montana--overnight. And deliveries this winter have not been any worse than the last 11 winters I have lived here.
So fuck all these weather related excuses. Winter comes every year. Get over it.
I don't believe anything I read and don't believe half of what I see....in the media.
Good info from FED x folks.
Nothing and everything is already priced in? Gee, that IS convenient.
One thing that hasn't been mentioned is that a lot of people have had huge increases in home heating costs this winter--both using more fuel and higher priced fuel. If you have to spend more money on home heating then you have less money to spend on online purchases.