United Parcel Service, Inc announced its profit for 2013 would not meet forecasts as a large flurry of late orders near the end of the U.S. shopping season for the holidays and a batch of cold weather took its toll on the delivery service.
The largest package delivery business in the world saw its shares drop by up to 3.5% in Friday morning early trading. UPS announced it had delivered over 31 million packages on December 23, its highest amount ever and over 13% higher than the prior peak day from a year ago.
However, the biggest delivery day took place six days later than was expected and turned out to be 7.5% more than planned, said UPS on Friday.
One analyst wrote that UPS did a poor job in forecasting for the holiday season.
The delivery company said on December 25 it had been overwhelmed by a huge volume of packages for the holiday, delaying the arrival of presents for Christmas across the globe.
The extremely cold weather coupled with a shopping season of six fewer days between Thanksgiving Day and Christmas caused Americans to go shopping towards the latter part of the season, when discounting on products was at a peak.
UPS has said the amount of online shopping at the end of December was higher than it ever has been. Shipment forecasts and volumes at UPS, as well as FedEx are watched closely by Wall Street and thought of as an indication of the overall health of the economy because of the large amount of products they move.
UPS was also hurt by many retailers cutting back their express shipping, which reduced costs for the manufacturers, but hurts the courier companies, which earn more on shipping that is faster.
On Friday, UPS said it expected earnings for the full year of $4.57 a share, which is below a forecast previously released of between $4.65 and $4.85 a share.
UPS also said it expected its fourth quarter profit would be $1.25 a share. Analysts had predicted that earnings for the fourth quarter for UPS would be $1.43 a share.
The company expressed confidence in its outlook for 2014.
Get Analysts' Upgrades and Downgrades Daily - Enter your email address below to receive a concise daily summary of analysts' upgrades, downgrades and new coverage with MarketBeat.com's FREE daily email newsletter.