Strategic Movements January 2022
Profits Down Following FedEx Price Hike
FedEx posted a 14% increase in profits in the fiscal second quarter following a price increase, yet cost increases related to labor led to operating income falling 13%. Contrast this performance to that of UPS and we conclude the price increases weren’t enough at FedEx, and the pressure to gain revenue and market share overweighed that of delivering profits.
FDX is slightly up to $245.55 on 17 December following the news from a prior $238.52 with a P/E ratio of 15; 2021 revenue was $84 million.
General Mills Plans Further Price Increases
Supply chain disruptions and costs inflation are weighing on the maker of Cheerios and Betty Crocker. Methods include list price increases and package size reductions. “The current operating environment is as dynamic and challenging as I’ve seen in my 27-plus years in the industry,” said GM CEO Jeff Harmening. Missing from the announcement is any indication of the size of the price increase.
Pricing Game Announcement
The challenge facing many companies in price management relates to competitive pressures, differences between brand and industry elasticity, and predicting the reaction of consumers to a price increase. Wiglaf Pricing offers a price simulation game that includes cost increases. It was developed to help executives get a more guttural feel for the nature of cost inflation and pricing decisions on volumes, revenue, and profits. Contact us for more information.
Judy’s on Cherry Is Charging for Bread
Rosemary focaccia used to be served free at Judy Henry’s chef-owned restaurant. Now, she charges $1.50 per loaf. She also stopped giving free refills on non-alcoholic beverages. If a customer values it, they will pay.