Interview: Doug Duncan --- Fedex
steel markers keep rolling along. allegheny technologies up over 10%. nucor up 5.67%. gains were fueled by comment made by nissan motors who said it does not have enough steel so nissan will cut production at plants for the next five days. steel makers have benefited from global trends with demand globally soaring. back to our top story, the state of the holiday shopping season. you heard from the c.e.o. of federated department stores in the last segment, terry lundgren talked about the hot selling items. let’s take it a step further and look at the shippers, companies like fedex freight that haul packages to your home and office. ellen braitman spoke to chief executive doug duncan. he expects to be busy this season.
>> retailers a big part of your business. how busy were you welling into―leading into the holiday season as retailers stocked shelves?
>> we have such a broad group of transportation services. we start seeing christmas merchandise in the heavy shipments probably mid to late summer and we believe we’re seeing the building of a very strong retail season.
>> can you give us a sense how it compares with last year? one of the issues this year is that the pace of growth seems to be slowing down.
>> well, that’s not what we see in our business. our business and our chief economist sees a good expansion in the overall economy led by the industrial sector. we’re seeing retailers are building now. this year we have three extra shopping days so we’re gearing up for a strong retail season. to give you an idea, we’re forecasting on december 13 will be our biggest day. we believe we’ll handle about 7.7 million packages that day, which is a 40% increase over our normal daily volume. that’s on top of the 70 million pound of freight we handle every day in the freight network.
>> that december 13 activity, that’s not the freight business but individual packages going from and to individuals?
>> that’s the package business. the week of december 13 for fedex ground is our biggest week. that’s where we’ll hit our peak and for fedex express, the air express network, somewhere around december 20 will be the peak day for them.
>> give us a sense across the business in terms of retail, what kinds of goods, what area of goods are the most popular?
>> well, at this point we’re seeing growth in all segments of retail but i think we’re especially seeing―expecting luxury goods to be really strong this christmas. that’s the sense we’re getting from talking to our major retail customers.
>> give us a sense, also, geographically. any sense there?%
>> i don’t think so, ellen. i can’t break out difference in geographics. i think we are seeing an expanding economy and i think it’s broad based all over the country.
>> and one interesting thing with retailers is certainly a real sense they’re trying to keep inventories lean so as not to have to do too many sales. any sense about reorders, whether you’re bringing more back to stores that perhaps didn’t order enough ahead of the holidays?
>> that’s an area where we do see a big change in the freight business. years ago, the freight business used to be basically over for the retail season around thanksgiving. but the retailers are doing a much better job on fast-cycle logistics and just-in-time inventories and we’re handling freight shipments do restockings literally right up to christmas.
>> what about the recent price increase you put into place? any slowdown yet in your business because of that price increase?
>> no, ellen. we provide a great degree of certainty, which customers need to exercise just-in-time inventories and fast-sinel logistics so they use the certainty of our network to help them reduce inventory costs which is a much bigger part of the puzzle than the transportation costs. so i think we’re bringing a real value-added service to these retailers that are doing such a great job on fast-cycle logistics.
>> that was ellen braitman with fedex freight chief executive doug duncan. shares of parent company, fedex, ended friday unchanged but for the year the stock supnearly 42%. oracle has taken the next step in the takeover battle for peoplesoft, planning a proxy battle for control of its rival. oracle has nominated four new directors to peoplesoft’s board. if elected, the board would likely drop peoplesoft’s poison pill defense against oracle, opening the door for oracle to complete its $8ant 8 billion takeover of -- $8.8 billion takeover of peoplesoft. oracle shares down 1% on the day and peoplesoft shares little changed. we’ll bring you a preview of the week ahead in europe and latest from the pacific rim when we come back.
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Listen Market briefing --- Bob (medium)
Interview: Holiday Shopping Seasona ---Mr Lundgren
>> welcome back to “world financial report.” i’m bob bowden, recapping the day on wall street. the major indexes did not move much -- concern foreign central banks may trim holdings in u.s. government debt. the dollar fell for the seventh straight week versus the euro, the longest losing streak in 10 months. a mixed market on the yen, the dollar up against the yen but down against the euro, the euro finishing at 1.32 91. martha stewart living omnimedia, former chairman and largest outside holder, jeffrey ubben, sold more than half his stake in the company this month as shares reached their highest price in more than two years. you see in the three-year chart, up 37%. regulatory filings show ubben’s holding company sold the shares. investors drove up optimism that martha stewart’s return to the company and kmart’s purchase of sears will boost shares. shares of martha stewart living omnimedia have risen 121% since march and doubling since stewart said she wanted to start serving her prison term. new york mercantile exchange floor trading reopens on monday. crude oil at $49.44 a barrel on the nymex in the three-day week that ended wednesday. russia’s biggest oil exporter may be liquidated. the fate of yukos will be decided next month. shareholders will vote on whether to liquidate the assets or declare bankruptcy. the board considered an anti-crisis program to help pay back taxes owed. but that plan is unlikely to work now as the government is auctioning off yukos’s biggest production unit. the vote on possible liquidation takes place december 20. you snooze, you lose, that’s what many americans seem to think as they got up early and went shopping looking for bargains. it’s known as black friday, the official start of the holiday shopping season. mike schneider spoke with terry lundgren, chief executive of federated department stores, which owns macy’s and bloomingdale’s. mr. lundgren talked about holiday shopping season expectations.
>> what do you expect this year to look like?
>> we expect november to be flat to 2% up, december to be 1 to 3% up. for the quarter, 1.5% to 3% for the fourth quarter for federated.
>> you feel comfortable with those numbers?
>> yes.
>> we mentioned before about you may have heard this previously about the e-commerce. describe how that impacts your operation?
>> we have macys.com and it is growing quickly. it’s still a small base for our size but it is positive and this year we’re introducing watch and shop and you can go to the website and click on the merchandise that is on the commercials and order it from there. we’re growing along with this business and feel good about it.
>> you have direct mail catalogs. does e-commerce supplement that?
>> we have direct mail intended to buy from only for bloomingdale’s and we think there is a catalog shopper but clearly the growth is from the online shopper.
>> give me a sense of―we’ve seen people in the video earlier this morning banging through doors to get into stores but is there one hot item out there this year drawing people in or not? it doesn’t seem like there’s any specific item people are going crazy for.
>> in our case there are several. our case is different than other stores. fragrance is a big business and celebrity fragrance is hot this year. we have a great read on that this morning. britney spears, beyonce and donald trump have fragrances sold at our stores off the shelves.
>> tell me about luxury items. do you have any specific -- cashmere sweaters or something like that―where you’re projecting how things will be this year compared to last year?
>> cashmere is a strong seller for us. we almost sold out last year. it sold so well late that we did not think it was going to sell as well and we marked it down. this year we bought the amount of inventory that is selling better this year than last year so we think the affordable luxury is important for us.
>> you’re in the process of changing names in stores around the country. having lived and worked in south florida, the burdines name is one i’m familiar with. why was that necessary ownd how do you think that will impact business going forward?
>> burdines, a great name in florida. rich’s, great name in atlanta but you can’t expand those names when you think about it. you can’t take burdines to new york or other states. but the macy’s brand and the bloomingdale’s brand are two of the best names in all of retailing and so why not expand them? we tested it with consumers, hyphenated the name in florida, burdines-macy’s all year long and we’re having one of the best years in history so we made the decision. the go-forward plan is all stores will be either macy’s or plads starting―bloomingdale’s starting march of next year.
>> shares of federated on the day up .6%. 34-cent gain on the day. up next, the shopping rush is on but what about shipping? you’ll hear from the c.e.o. of fedex freight to see what kind of volume will be done this year.
