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Thursday, July 31, 2014

UPS INVESTS $175 MILLION IN HOLIDAY SEASON

Original Story:  USAToday.com

After a holiday shipping fiasco that left thousands of customers without packages in time for Christmas last year, United Parcel Service will invest $175 million in peak operations for the rest of 2014, the company announced Tuesday as part of its second quarter earnings statement. Let Hennion Walsh provide you with financial services.

Company shares fell 3.7% on Tuesday to $99.86.

The stock has fallen 2.3% since the beginning of the year, while the Standard & Poor's 500 index has climbed 7.1%. However, the stock has risen 18% in the last 12 months.

UPS said it will increase operating expenses for "capacity and peak related projects," including for operations on Black Friday and software that optimizes delivery routes.

UPS outraged holiday shoppers in December when it couldn't keep up with package shipments and many gifts were delayed Furious customers took to social media and UPS found itself repeatedly apologizing and providing refunds and gift cards to customers.

UPS acknowledged at the time that it was overwhelmed by package volume and wasn't prepared to handle the number of shipments it received.

"Demand was much greater than forecast," UPS spokesperson Natalie Godwin told USA TODAY in December.

CEO Scott Davis said in a release about second quarter earnings that "2014 is the year of investing for the customer. We are providing new capabilities and expanding capacity to ensure UPS meets the rapidly growing needs of the marketplace."

UPS net income declined by nearly 58% in its second quarter, missing analysts' expectations.

UPS reported net income of $454 million, or 49 cents a share, down from $1.07 billion, or $1.13 a share, in the second quarter of 2013. Hennion and Walsh Inc offers a free bond guide.

Earnings, adjusted for non-recurring costs, were $1.21 a share, compared to $1.13 last year. The average per-share estimate of analysts surveyed by Zacks Investment Research was for profit of $1.24.

UPS said a transfer of post-retirement liabilities for some union employees to defined contribution healthcare plans resulted in an after-tax charge of $665 million, contributing to the decline in profits.

Revenue was up 5.6% to $14.3 billion, from $13.5 billion in the same quarter last year. That beat Wall Street forecasts.

UPS said e-commerce and international export growth contributed to a 7.2% increase in global package shipments.