- The Big Picture - http://www.ritholtz.com/blog -

Shipping to Lattes: The Problem of Higher Prices

Posted By Barry Ritholtz On November 16, 2007 @ 9:47 am In Consumer Spending,Earnings,Economy,Valuation | Comments Disabled

Earlier this morning [1], we noted Starbucks’ (SBUX) inflation woes.

When I wrote "Expect to see more problems like these," I didn’t mean within an hour or two: FedEx (FDX) dropped the bomb that slowing growth and higher energy costs put the squeeze on profits and future revenue expectations:

FedEx Corp. lowered its earnings outlook, citing high fuel costs and weakness in its less-than-truckload freight business.

The Memphis, Tenn., based shipping company cut its fiscal second-quarter earnings estimate to $1.45 to $1.55 a share from $1.60 to $1.75 and dropped its its full-year earnings estimate to $6.40 to $6.70 a share from previous guidance of $6.70 to $7.10.

FedEx said the cuts were due in part to an 8% increase in fuel costs to $85 million and weaker shipping volumes. Less-than-truckload carriers combine freight from multiple customers in their trailers.

"While we have dynamic fuel surcharges in place, they cannot keep pace in the short-term with rapidly rising fuel prices," said Alan B. Graf, Jr., FedEx executive vice president and chief financial officer.

So let’s make a list: What other firms are in danger of seeing sales and profits falter due to high input prices — be they food, energy, labor or other crucial components?

Use comments [2] below to add to the list . . .


Fedex Cuts Earnings Outlook [3]
November 16, 2007 9:34 a.m.


Article printed from The Big Picture: http://www.ritholtz.com/blog

URL to article: http://www.ritholtz.com/blog/2007/11/shipping-to-lattes-the-problem-of-higher-prices/

URLs in this post:

[1] this morning: http://bigpicture.typepad.com/comments/2007/11/more-tame-infla.html

[2] comments: http://bigpicture.typepad.com/comments/2007/11/shipping-to-lat.html#comments

[3] Fedex Cuts Earnings Outlook: http://online.wsj.com/article/SB119522218219395678.html

Copyright © 2008 The Big Picture. All rights reserved.