Shipping to Lattes: The Problem of Higher Prices

Friday, November 16, 2007 | 09:47 AM

Earlier this morning, 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 below to add to the list . . .


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

Friday, November 16, 2007 | 09:47 AM | Permalink | Comments (41) | TrackBack (0) add to | digg digg this! | technorati add to technorati | email email this post



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that's going to be a pretty long list......

Anything related to consumer discretionary spending...... is that general enough?

seriously the writing has been on the wall for SBUX......Schultze made sure that no one was going to sell stock above the price he HAD to sell at-around 33 (remember his quality epiphany??-well that came three days after he had to sell 3m shares to finance some other venture)it's been a steady decline since that point.

mgmt at SBUX needs to take off the blinders and realize doubling the growth of the company is just unrealistic in the current credit problem.

Gap and fade......yawn....


Posted by: michael schumacher | Nov 16, 2007 9:59:41 AM

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