FedEx reveals details of Kinkos integration
Citing an improving US economy and growing demand for freight and ground delivery services, FedEx raised its quarterly profit forecast and predicted next fiscal year’s earnings largely above Wall Street expectations. The world’s largest air-express shipper also revealed further details on how it plans to integrate Kinko’s, which it acquired in January for USD2.4bn, into the FedEx system. Kinko’s stores primarily offer print copy services to walk-in customers and small- and medium-sized businesses. FedEx expects to transform the Kinko’s stores, which number over 1,000 in the US, into full-service shipping centers where customers can handle all their document needs – from printing to packing to shipping. In the next few months, the company expects to implement its full line of shipping services in stores, including packaging. FedEx will also use its international network to expand Kinko’s outlets overseas. The acquisition is clearly a direct competitive challenge to rival United Parcel Service, which purchased MailBoxes Etc a few years ago and converted them to UPS Stores. That acquisition has helped UPS access individual consumers and the highly-sought after small- to medium-sized business customers. Alan Graf, chief financial officer of FedEx, said Kinko’s would add USD2.1bn in revenues to its next fiscal year starting June 1. FedEx increased its fourth quarter earnings guidance by 5 cents to USD1.20 to USD1.30 per share. Wall Street had been expecting earnings of about USD1.21 per share for the three months ending May 31. The company, which was holding an investors conference in its home base of Memphis, Tennessee, also raised the full year 2004 estimate by 5 cents to USD3.35 to USD3.45 per share. For the next fiscal year, FedEx said net profit would be between USD4.00 to USD4.20, compared to Wall Street predictions of USD4.05 per share. “Our optimism stems from increasing customer demand for services in all business segments, a lower cost structure at FedEx Express and improving economic conditions,” Mr. Graf said. Despite the upbeat earnings outlook, FedEx shares slipped almost 2 per cent to USD73.80 in late afternoon trading in New York.
