Costco, Nike and FedEx are warning there’s extra inflation set to hit shoppers as holidays method

A worker wearing a protective mask removes

David Paul Morris | Bloomberg | Getty Images

Delivery bottlenecks, which have led to rising freight costs, are a vacation headache for US retailers.

Cost co This week joined the long list of retailers on the alert about rising shipping prices and the associated supply chain problems. The warehouse clerk who a similar cautionary note in MayThe sportswear giant joined her Nike and economic pioneers FedEx and General mills when discussing similar concerns.

The cost of shipping containers overseas has increased in recent months. Getting a 40-foot container from Shanghai to New York cost about $ 2,000 a year and a half ago, just before Covid pandemic. It is now around $ 16,000, according to Bank of America.

In a conference call with analysts Thursday, Richard Galanti, Costco’s chief financial officer, called freight costs “permanent inflationary items” and said these increases are being combined with things that are “somewhat permanent” to add to the pressure. This includes not only freight, but also higher labor costs, increasing transport and product demand as well as scarcity of computer chips, oils and chemicals and higher raw material prices.

“We can’t hold onto all of this,” said Galanti. “Some of it has to be passed on, and it is passed on. We are pragmatic about it.”

To quantify the situation, he said inflation is likely to be between 3.5% and 4.5% for Costco. He noticed that Paper products saw cost increases of 4% to 8% and cited shortages in plastic and pet products that are driving prices up from 5% to 11%.

“We can hold the line on some of these things and do a slightly better job – hopefully a better job than some of our competitors and even more extreme than value,” said Galanti. “So I think all of these things have worked a little in our favor so far, at least despite the challenges.”

Prepare for the holidays

However, the timing is not good.

Persistent inflationary pressures come at a time when retailers prepare for the Christmas shopping season – Halloween, Thanksgiving, and Christmas, then the New Year. The pandemic brought it about a relentless array of factors After a generation of mostly moderate price pressure, this has made inflation an economic catchphrase.

Companies are forced to deal with the situation before a critical phase.

“We’re approaching the holidays, we’ve worked with retailers, and we see that # 1 they need to be flexible with their supply chain,” said Keith Jelinek, executive director of global retail practice at consulting firm Berkeley Research Group. “We noticed an increase in the cost of goods, especially for clothing, including the cost of inbound shipping with the cost of containers, increases in transport, truck transports to get to distribution centers.”

“All of these costs will weigh on operating profit,” he added. “Retailers are currently facing the challenge of how much I can pass on to the consumer, or how I can get other efficiencies out of my operations to meet my overall margin.”

Many companies have signaled that consumers are ready, at least for now, to accept higher prices. Trillions of government incentives during the pandemic helped increase personal wealth Household net worth increased by 4.3% in the second quarter.

In the company’s conference call on Thursday, Nike CFO Matthew Friend referred to the price increases in the second half of the year, as well as “more than expected full price realization” and “additional transportation, logistics and air freight costs to move inventory in this dynamic environment”.

Nobody knows how long consumers will be willing to pay higher prices. Jelinek said he anticipates the current situation will last at least during the holiday season and until early next year

“There is only a limited amount that you can give to consumers,” he said. “What most retailers do is think about theirs [profit and loss statements] and they want to improve performance and optimize efficiency. That means really focusing on your supply chain. “

It also means raising prices.

Corporate warnings

FedEx announced this week that it will add 5.9% to the shipping cost for domestic services and 7.9% for other offers. The company said it was hit by labor shortages and “costs related to the challenging operating environment”.

The head of the company’s main competitor admitted the hurdles the business is facing.

“The job market is tight and in certain parts of the country we have had to make some market price adjustments to respond to market demands.” UPS CEO Carol Tome said on CNBC’s Thursday, “Closing bell. “

She added that the company was also affected by supply chain issues.

“I’m afraid this will continue for a while. These problems have been a long time coming and we must all work together to remove these blockages, ”said Tome.

Federal Reserve officials this week admitted that inflation will be higher in 2021 than they expected. However, you can still see that prices will settle in a more normal range of just over 2% in the years to come.

But Cleveland Fed President Loretta Mester said in a speech on Friday that she saw “upside risks” for the central bank’s inflation projections.

“Many companies report that cost pressures are mounting and consumers are willing to pay higher prices,” she said. “The combination of strong demand and supply chain challenges could last longer than I expected, leading people and businesses to raise their expectations of future inflation more than we have seen before.”

Fed officials said they were ready to withdraw monetary stimulus They provided during the pandemic, but prices are unlikely to increase anytime soon. However, if prices and expectations stay higher, Mester said, Fed policies would have to be “adjusted” to control inflation.

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BOB WEST ON GOLF — FedEx playoffs underscore PGA Tour cash machine – Port Arthur Information

How dramatically the money to be won on the PGA Tour escalates, not least thanks to Tiger Woods’ influence on the game, is always an exciting topic. Therefore, on the eve of the cash cow at the end of the tour’s season – the FedEx Cup Playoffs – this is an ideal time to dive back into the riches.

As a baseline, let’s toss some numbers on Jack Nicklaus, who is either number 1 or number 1A when it comes to being the greatest in golf. Nicklaus’ career earnings were $ 5.7 million. In his biggest season, 1972, he won seven times for a “whopping” $ 317,000.

The Golden Bear is at 18. His wins at the largest and most prestigious golf events grossed $ 784,500.

Those numbers are pretty much the proverbial chicken feed, of course, compared to what’s at stake in the FedEx playoffs over the next three weeks. For example, the winner receives $ 15 million deposited into their bank account. Challengers also collect a king’s ransom.

The money is so ridiculous that the guy who finished 125th in this week’s playoff opener

For those who don’t remember, the 2007 FedEx Cup Playoffs were launched for a number of reasons, not the least of which was to send a strong signal for the PGA Tour, to send a strong signal to anyone with the idea of start a world tour to siphon off players. The tour participants saw the $$$ signs and started pinching themselves.

How lucrative were the playoffs for the FedEx Cup? When you consider Nicklaus’ career winnings of $ 5.7 million, numerous players have already topped that in the playoffs. Rory McIlroy is the leading playoff cash winner with a staggering $ 41.7 million. That’s almost eight times Nicklaus’s career record.

Dustin Johnson is not far behind McIlory at $ 40.4 million. Then comes Tiger with $ 39 million. From there it falls to Justin Thomas at $ 25.6 million and Justin Rose at $ 25.4 million. Eleven players are over $ 18 million. It’s like throwing monopoly money around, only it’s real.

Give your child a golf club today.

Speaking of money wins, let’s take a quick look at who won the most money this season. Colin Morikawa, the brightest of the young stars, was number one at $ 7,039,768. Jon Rahm was just behind at $ 6.8 million. Jordan Spieth at $ 6.4, Bryson DeChambeau at $ 6.3 and Louis Oosthuizen at $ 6.2 rounded out the top 5.

In total, 20 players raised over $ 4 million, 34 over $ 3 million, 61 over 2 million and an astonishing 124 over $ 1 million. Just as a reminder, for winning 18 majors, Nicklaus’ fortune grew by just $ 784,500.

CHIP SHOTS: Andrew Landry finished the 2020-21 PGA Tour season on a positive note and was spectacular at times. Landry opened and closed the Wyndham Classic with rounds of five under par 65, making 15 birdies in the process.

Unfortunately, the ex from Port Neches-Groves couldn’t be better than 72 in the middle two rounds and had to be content with a draw on 51st place. That was worth $ 15,564, bringing its official seasonal earnings to $ 594,200. Landry ranked 155th in cash and FedEx points.

Seven was the lucky number for Joe Gongora of Port Arthur on Friday the 13th. Gongora scored his 7th hole in one by sinking a pitching wedge on the 115-yard 7th hole at Babe Zaharias.

The shot was watched by Rufus Reyes, Larry Johnson and Aubrey Ward and helped that team tie the front at 3 under on Friday’s 2 ball. Also 3 under on the front was the foursome of Ron LaSalle, Bill Hanley, Larry Reece and George Adams.

The team of Bob West, Bob Luttrull, Don MacNeil and James Johnson won the back with minus 1. Closest to pin wins came Dwayne Morvant (# 2), Gongora (# 7), Dan Flood (# 12) and Morvant (# 15).

On Monday Senior Plus 3 Ball at Zaharias, former minor league baseball player Rusty Hicks scored his best ’70 ever to help his team score a sweep with minus 1 on each side. The team was rounded off by West, Ward and Richard Malone.

At the Super Saturday Senior 2 Ball in Zaharias, the team of Rick Pritchett, LaSalle, Brian Mirabella and Lonnie Mosley took the lead with minus 2. Ed Holley, Cap Hollier, John Jessen and Charles Perez’s foursome sat down on the back with minus 3.

The Wednesday DogFight at Babe Zaharias was played in an all-points-count format. The team of Hollier, Larry Johnson, Flood and Jake Selensky took first place with 30 points. One point behind in second place was the four of Earl Richard, Charles Leard, Brad Royer and Jimmy Schexnayder.

Closest to pin wins were Vercher (# 2, # 7), Larry Stansbury (# 12) and Adam Noel (# 15).

At the Ball Zaharias 2 on Tuesday, August 10th, the team of Ted Freeman, Hollier, Art Turner and Glen Knight won the front with a minus 5.

Golf messages should be sent to rdwest@usa.net

FedEx (FDX) Q3 2021 earnings

Boxes containing the Moderna COVID-19 vaccine are being prepared for shipment at the McKesson distribution center in Olive Branch, Mississippi, United States, on December 20, 2020.

Paul Sancya | Reuters

FedEx reported better-than-expected profits and sales for the last quarter after an “unprecedented” peak shipping season, despite the February storm that “severely affected” operations at several of its major hubs.

FedEx shares rose around 3% in after-hours trading on Thursday.

Here’s how FedEx has performed relative to investor expectations for the third fiscal quarter of 2021 ending February 28, based on Refinitiv estimates:

  • Adjusted earnings per share: $ 3.47 per share versus $ 3.22 expected.
  • Revenue: $ 21.51 billion versus $ 19.95 billion expected.

Revenue increased 23% from $ 17.49 billion in the same quarter last year. The company said the increase was due to “strong volume growth” in domestic home parcel shipping and international shipping.

However, the February storm that hit several of the company’s operational hubs, including the primary FedEx Express hub in Memphis, lowered operating income by approximately $ 350 million.

CEO Fred Smith said in a statement that the company expects “the demand for our unmatched e-commerce and international express solutions will remain very high for the foreseeable future.”

The Memphis-based logistics giant has become a key component of U.S. efforts to distribute Covid-19 vaccines alongside rival UPS. FedEx announced in early March that the third authorized shot had been delivered Johnson & Johnson and expects a “significant increase” in volume in the coming months.