UPS reports weaker profit than expected
After Sandy Springs-based UPS failed to deliver tens of thousands of packages on time for Christmas 2013, the company said it will report a weaker profit than expected as a result.
The shipping giant said it used 30,000 more temporary employees than it expected in order to cope with a surge of last-minute orders amid an “unprecedented level of online shopping.” The problems were exacerbated by the shorter holiday shopping period due to a late Thanksgiving and storms in December. All in all, UPS said it used 85,000 temporary employees instead of the 55,000 originally planned.
The company now anticipates earnings of $4.57 per diluted share for the full year 2013, down from its previous expectations of making $4.65 to $4.85 per share.
“We think UPS did a poor job forecasting the holiday season, but we expect improved readiness this year as online shopping continues to grow,” Standard & Poor’s analyst Jim Corridore wrote in a note to investors.
The late surge of online orders pushed UPS’s “peak week” beyond its normal period of Dec. 16-20. The busiest delivery day turned out to be Dec. 23 — six days later than expected. On Dec. 23, UPS delivered more than 31 million packages — a one-day record, and 13 percent higher than the peak day of 2012.
Still, UPS said it is “confident of its 2014 outlook,” expecting a 10 to 15 percent year-on-year increase in diluted earnings per share. The company reports its full financial results Jan. 30.
About the Author
As business team lead, Kelly Yamanouchi edits and writes business stories. She graduated from Harvard and has a master's degree from Northwestern.
