Score one for workers: FedEx to restore 401(k) match as earnings rebound
A common complaint of some Wall Street bears is that rebounding corporate earnings don’t mean things are getting better for workers -- or, by extension, the economy -- because many companies have just continued to hoard cash.
But FedEx Corp. on Monday sharply boosted its earnings outlook and also said it would put more money back into employees’ pockets: The company said it would fully restore matching contributions to workers’ 401(k) plans beginning Jan. 1, 2011.
FedEx suspended its 401(k) match on Feb. 1, 2009, in the depths of the recession, joining a long list of blue-chip firms that hacked pay or benefits to conserve cash.
But the company’s revenue has been rebounding with the global economy over the last year. On Monday, FedEx raised its profit outlook for the first fiscal quarter ending Aug. 31 and for the full year, citing further improvement in shipping volumes worldwide.
The company said it now expected to earn between $1.05 and $1.25 a share this quarter, instead of the range of 85 cents to $1.05 it had previously estimated.
FedEx’s shares were up $4.12, or 5.2%, to $83.08, a seven-week high, at about 11:20 a.m. PDT, helping to lead a broad market rally.
Last week the company’s rival, UPS, also raised its earnings estimates for the year. Both FedEx and UPS are benefiting from rising shipping demand for technology products -- such as Apple Inc.’s hot iPads -- as spending in that sector resurges.
FedEx’s move to restore its 401(k) match is part of a trend, although many workers may wonder what’s taking big companies so long. Of those large employers that had reduced or suspended matching contributions since September 2008, only half have since restored them, according to a spring survey by consulting firm Towers Watson.
But the survey also found that “virtually all [companies] indicated they are considering reinstating all or a portion within the next 12 months.”
-- Tom Petruno
Photo: Shannon Stapleton / Reuters