FedEx 2Q soars on strong online holiday sales
NEW YORK—FedEx Corp. said Thursday its net income soared in the fiscal second-quarter as it raised prices and benefited from more shipments of online holiday gifts.
The company also stuck with its prediction for the full fiscal year ending in May and issued an outlook for the third-quarter, which includes the critical holiday season. Most of the forecast was above Wall Street's expectations.
Shares were up 8 percent Thursday.
The Memphis, Tenn., company earned $497 million, or $1.57 per share, compared with $283 million, or 89 cents per share a year earlier. Last year's quarter was weighed down by 27 cents in charges related to the combination of its freight and less-than-truckload units and a legal reserve.
The results topped Wall Street's views. Analysts polled by FactSet expected a profit of $1.53 per share for the September-to-November period.
FedEx's revenue rose 10 percent to $10.59 billion.
The performance of the company's FedEx Home Delivery and FedEx SmartPost services were especially strong, said CEO and Chairman Fred Smith. Those are, in general, the least expensive shipping options and are used widely by a number of major online retailers like Amazon.
"With the healthy growth in online shopping this holiday season, demand is increasing for these residential delivery services," said Smith
FedEx's optimism matches a forecast released Thursday by the nation's largest retail trade group. The National Retail Federation said it now expects holiday sales in November and December will rise 3.8 percent to a record $469.1 billion. That's up from the more modest 2.8 percent forecast made in early October. It's still below the 2010 season but well above the decade average.
FedEx's performance and forecasts tend to be an indicator of broader economic health because the company ships so many packages for consumers and businesses every day.
Rival UPS, the world's biggest package shipper, reported higher quarterly earnings and revenue in October.
FedEx Corp. also said Thursday that it has signed a deal to buy 27 new Boeing 767-300 aircraft, with the first three set to arrive in 2014. They will replace some planes that are as much as 40 years old. At the same time, the world's second-largest package delivery company is also pushing off delivery of 11 Boeing 777 freighters as it works to match slowing demand in Asia.