Thursday, June 19, 2008

Fedex Look Carefully

Fedex (FDX) released numbers and confirmed that the economy is slowing down. The cost of fuel is up and business is tough. To those who are surprised well what can we say? They are struggled with the Kinko’s thing and are rebranding it as Fedex Office. Non cash write downs now. Cash costs attributable to rebranding soon to appear.

Management rightfully notes that the cost of fuel is up dramatically. Q4 comparable comparisons indicate a 53% increase. Year over year shows 28%. They claim to fuel surcharge customers but appear to be unable to stem the flow of red ink.

Check this cost. Purchased Transportation is up 23% in Q4 and for the year they are up 10%. Last fiscal year they spent $2.7 billion. The spend is clearly increasing. Next to no comment on this point. You have got to be feeling a little naked on that one.