FedEx Isn’t Worried About Amazon or Uber Delivery

FedEx isn’t worried about Amazon or Uber usurping it as a delivery powerhouse.

The company delivered its Q4 earnings yesterday and on subsequent call, vice president Mike Glenn poo-pooed the new service Amazon’s reportedly testing to allow non-employees to deliver packages, without actually mentioning the company by name.

Amazon’s experimental program, internally called “On My Way,” would recruit retailers in urban areas to store packages. Then regular people wanting to get paid to make deliveries could use an app to see where to pick up and drop off goods as they were going about their day.

Following a question about new tech competitors, Glenn said that getting packages from uniformed delivery workers is important to people.

“Research has indicated time and time again that a uniformed person with proper identification showing up at your doorstep is an important issue for customers. Consistency of customer experience is very critical in that regard. So when you talk about the challenges of building a network, the scale, the input costs, the technology issues and the customer experience required to deliver what customers expect of companies like FedEx and our primary competitors, it’s a pretty tall hill to climb. ... So obviously we continue to monitor these situations and opportunities that pop up from time to time. But we feel pretty comfortable in terms of our strategy going forward and our ability to serve the e-commerce market and our customers.”

FedEx Earnings Report Contains Few Surprises
FedEx Corp. reported adjusted earnings of $2.66 per diluted share for the fourth quarter ended May 31, compared to adjusted earnings of $2.54 per diluted share a year ago, thereby falling short of what many market analysts expected.

Jerry Hempstead, president Hempstead Consulting

“FedEx yields are good and improving meaning the shipper is paying more for the services they buy”Jerry Hempstead, president Hempstead Consulting

For fiscal 2015, adjusted earnings were $8.95 per diluted share, compared to $7.05 per diluted share a year ago.

Without adjustments, FedEx reported a loss of $3.16 per diluted share for the fourth quarter compared to a profit of $2.62 per diluted share a year ago, and earnings of $3.65 per diluted share for the full fiscal year, compared to $7.48 per diluted share last year.

“FedEx pretty much telegraphed to the investment world everything in advance except the big miss on the top line revenue,” said Jerry Hempstead, president of Hempstead Consulting in Orlando. “So yesterday the Street punished their stock.”

Other business analysts noted that the company’s international business was hurt by the strong dollar and falling fuel surcharges.

According to Hempstead, the company has managed to make some financial adjustments to its balance sheet and network to better position itself for the future.

FedEx can also repair their top line, said Hempstead, by “turning their sales force loose” upon UPS and DHL.

“Of late they have been reluctant to push too hard, but FedEx is a very disciplined sales organization and can make any number they set their mind to,” said Hempstead.

Sources: Business Insider & USA Today