United Parcel Service CEO Carol Tome defended her company’s long-term strategy on Tuesday after stocks fell despite beating estimates in her second-quarter report.
UPS stock fell nearly 7% after the company showed domestic shipments slowed over the three-month period, causing US sales forecasts to be missed.
Tome said on CNBC that it came as no surprise to the shipping company that the average daily domestic volume in the US was down slightly year over year.
“The way consumers shop and e-commerce sales are booming has changed constantly, but the rate of growth is no longer the same as it was last year when everyone took shelter,” she told Jim Cramer in a “Mad Money “Interview.” We realized that when the economy opened and the shops reopened, consumers would go back to their stores, and we saw it happen. “
Shipments in the US were down 3% in the second quarter, and bottom packaging volumes were down 4% year over year. However, revenue per package for U.S. shipments rose 13% and was even higher overall. UPS saw strength in overseas markets.
Tome, who started running the $ 170 billion company in June 2020, said UPS had predicted a slowdown in US shipments after SurePost, its residential ground service, accounted for 53% of total US volume last year .
While Tome expects the company’s operating margins to decrease in the second half of 2021, she told Cramer that it was a seasonal trend for UPS. Operating margin is the percentage of revenue that is left after taking into account the cost of goods sold and other expenses.
By 2023, the company expects sales of $ 102 billion – up 20% from 2020 – and an operating margin of 12% in the U.S., she said.
“We expect the volume to increase in the second half of the year, not as much as the first half based on year-over-year comparison, but the volume will increase,” said Tome.
“But this is not about a performance in the second half of the year, this is about where we are going to take the company in the long term.”
UPS stocks closed Tuesday’s session at $ 195.19, up nearly 16% year over year.