Earnings: FedEx, Family Dollar

Earnings: FedEx | Family Dollar

FedEx Posts Strong Second Quarter Profit, But Outlook Weak

MEMPHIS, Tenn. - (AP) - Express package delivery company FedEx Corp. (FDX) on Wednesday said its fiscal second-quarter profit rose 9 percent on strong results from its ground delivery business.

But the company also issued a third-quarter forecast that was below both the previous year's results and analysts' expectations, and the company's shares fell almost 4 percent to $109.70 in premarket trading

Earnings for the quarter ended Nov. 30 increased to $511 million, or $1.64 per share, from $471 million, or $1.53 per share, during the corresponding period last year.

The results included costs associated with a new labor contract for its pilots that totaled about 25 cents per share. Excluding the item, the company said it earned $1.89 per share in the period.

Analysts polled by Thomson Financial forecast a profit of $1.76 per share. The Thomson estimates excludes 20 cents per share related to upfront pilot compensation.

Revenue was up 10 percent to $8.93 billion from $8.09 billion during the year-ago period. Analysts expected revenue of $8.91 billion.

Chief Financial Officer Alan B. Graf Jr. said in a statement that second-quarter earnings were better than forecast because of lower-than-expected fuel prices, strong growth at FedEx Ground and insurance proceeds from Hurricane Katrina.

Revenue from its ground delivery business rose 16 percent to $1.52 billion.

Looking ahead, the company said it now expects adjusted full-year profit to range between $6.60 to $6.90 per share. The company said in September that it expected adjusted earnings of $6.50 to $6.85 per share.

FedEx forecast profit of $1.20 to $1.35 per share for the third quarter, down from $1.38 per share in last year's third quarter, and between $1.98 and $2.13 per share in the fourth quarter.

Analysts now expect a profit in the fiscal year of $6.82 per share, third-quarter earnings of $1.55 per share and fourth-quarter earnings of $1.98 per share.

Graf said the company's third-quarter guidance is suffering a tough comparison to last year's results because FedEx's December 2005 fuel surcharges were set after prices had spiked following Hurricane Katrina.

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Family Dollar Meets Views

CHICAGO (Reuters) - Family Dollar Stores Inc. (FDO) posted a 6 percent increase in quarterly profit on Wednesday, matching Wall Street forecasts, as sales of cellular phones and food helped make up for lackluster clothing demand.

The discount retailer, which sells items such as toys, cleaning supplies and clothing at its more than 6,200 U.S. stores, said December sales at stores open at least a year remained on track to meet its forecast for flat to 2 percent growth.

"The biggest shopping days of the season have not yet occurred, and results for the full month will be significantly impacted by the next several days," the retailer said.

Family Dollar earned $54.4 million, or 36 cents per share, in the fiscal first quarter, ended November 25, up from $51.4 million, or 32 cents per share, a year earlier.

The earnings per share matched the average of analysts' estimates, according to Reuters Estimates.

Family Dollar said the results did not take into account any adjustments that may be required when it completes a previously announced review of stock option grant policies.

The Matthews, North Carolina-based retailer said an incorrect date was used for accounting purposes on options granted to newly hired employees and in connection with its annual grant of options in one or more years. It has not yet determined the amount of any charges.

As a result of the options review, Family Dollar has not filed its annual report with the U.S. Securities and Exchange Commission, and does not expect to file its first-quarter report on time. The retailer said it will not repurchase its shares until it completes all required filings.

First-quarter sales rose 6 percent to $1.6 billion, helped by demand for prepaid cellular phone plans. The average amount spent per transaction rose, but the number of shoppers fell.

The discount retailer maintained its earnings forecast for the current year, but said sales of lower-margin items would likely weigh on profitability.

Full-year earnings are expected to be in the range of $1.57 to $1.69 per share. For the second quarter, earnings per share are expected to range from 58 cents to 64 cents per share.

Analysts, on average, expected a full-year profit of $1.65 per share and second-quarter earnings of 62 cents per share, according to Reuters Estimates.

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