UPS reduces fourth quarter earnings guidance

Citing a compressed peak season and what it described as an unprecedented level of online shopping that included a surge of last-minute deliveries, UPS reduced its fourth quarter earnings guidance today.

UPS said it is calling for fourth quarter 2013 earnings per share of $1.25, with full-year 2013 earnings per share expected to come in at $4.57, which is below its previous guidance of $4.65 to $4.85.

The company saw a fair amount of customer angst in regards to late deliveries for orders made online that did not reach their destinations in time although industry estimates suggest it was not a high percent of its total package volumes.

The company’s peak day, December 23, saw UPS deliver more than 31 million packages, which stands as its highest day ever, and 13 percent higher than its 2012 peak day. Company officials said that this year’s peak delivery day was six days later than expected and topped its forecast for volume by 7.5 percent.

Jerry Hempstead, president of parcel consultancy Hempstead Consulting, said that this earnings guidance is due in part to the method and means UPS took to keep its network moving that was the result of the storm that hit Texas in mid-December, explaining that multiple UPS hubs in Texas were affected.

“The other thing that goes out the window is overtime pay so all constraints had to be tossed out the window as late arrivals and high volumes took its toll,” he said. “In the end it’s weather and [the situation is] non recurring. I think UPS did an outstanding job in its attempt to maintain service through some adverse conditions.”

The company’s fourth quarter earnings announcement is on January 30.