United Parcel Service’s package deliveries declined more than expected during the second quarter, driving the shares down even as higher prices helped boost sales and profit.
United Parcel Service Inc.’s package deliveries declined more than expected during the second quarter, driving the shares down even as higher prices helped boost sales and profit.
Chief Executive Officer Carol Tome’s strategy has been to break from UPS its tendency to chase volume at any cost. Since she took over in June 2020, the courier has been focused on more profitable customers, such as health care and small businesses. The courier’s margins have been helped by higher prices and limits on discounts traditionally given to large-volume customers.
After struggling to keep up with surging demand during the height of the pandemic, UPS is now adjusting to a slowdown of package deliveries. People are now spending less on goods delivered to their homes and more toward services, such as going to concerts and eating out. Giant retailer Walmart Inc. reflected a change in consumer behavior Monday by cutting its profit outlook, saying shoppers are focusing on lower-margin essentials.
The courier’s adjusted operating profit margin was 14.4 per cent, up from with 14 per cent a year earlier. Margins were driven by increased revenue per package, spurred by both price increases and a shift to higher value packages. Revenue per package jumped almost 12 per cent in the US and surged almost 15 per cent for the international business.
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