- UPS experiences first-quarter misses on both earnings and revenue, hinting at a wider economic slowdown.
- CEO Carol Tomé cites challenging macro conditions and changes in consumer behavior for the company's performance.
- High-stakes contract negotiations with the Teamsters union put over 340,000 UPS workers on the brink of a potential strike.
Chill out and grab a cup of coffee, because we've got some news on the UPS front. The big delivery behemoth has seen its shares take a little tumble after reporting first-quarter earnings and revenue that didn't quite meet Wall Street's expectations. But don't sweat it too much, because this could hint at a wider economic slowdown, especially when you consider what the UPS CEO, Carol Tomé, had to say.
She noted that a drop in US retail sales and a little demand weakness in Asia caused the company to miss its marks in the first quarter. With the way things are going, UPS is expecting to feel the pressure for a while. Comparing its performance to last year, we can see that revenue fell by 6% and consolidated operating profit took a 21.8% hit. Yikes!
Now, the Atlanta-based company had already warned us that its 2023 profit margin would be on the tighter side, especially after a record profit in 2022. However, with "challenging macro conditions and changes in consumer behavior," UPS is now looking at the lower end of its initial full-year earnings outlook.
But wait, there's more! UPS is in the midst of some intense workforce discussions. Contract negotiations between UPS and its unionized workers are going down, and it's kind of a big deal. We're talking about the largest private collective bargaining agreement in the US, with over 340,000 workers represented by the Teamsters union. If they can't reach an agreement, the Teamsters are ready to strike – something that hasn't happened in over 25 years.
A UPS strike would throw a major wrench in the works, causing chaos for businesses and consumers alike. Remember the 1997 walkout? That cost the company hundreds of millions of dollars in losses. A 2023 walkout could be even bigger. The Teamsters are pushing for better wages, more manageable shifts, and improved safety measures, among other things. So, fingers crossed for a resolution before the current contract expires in July.
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