United Parcel Service Inc. sank after the courier announced the surprise retirement of Chief Operating Officer Jim Barber, stoking leadership uncertainty as the company revamps itself to handle surging e-commerce.
- Barber, 59, who helped lead the courier’s growth in Europe and Asia during his 35 years with the company, will retire at the end of December, UPS said in a statement Tuesday. No successor was named.
- “It’s really natural progression,’’ Chief Executive Officer David Abney said in an interview. “You’re going to have key leaders who are going to retire and it’s going to open up the door. We’ve got a very deep bench and I believe that it just opens up opportunities.’’
Key Insights
- While Barber’s exit rattled investors, UPS turned in a strong financial performance. Adjusted operating profit climbed to 12% of sales in the third quarter from 10.5% a year earlier, according to a separate company statement. The courier has been investing heavily to push down the cost of residential deliveries and expand in the health-care market.
- Savings from more automated sorting centers and new fuel-efficient planes began to kick in more strongly during the third quarter, and domestic unit costs fell 2.5% on an adjusted basis. UPS also cut its investment plans by about $500 million this year and the same amount next year, potentially easing concerns about overspending.
- Abney is still trying to coax shares back to the peak of $134.09 reached in early 2018. Investors punished the stock when the CEO announced the price tag of his transformation plan—about $20 billion over three years—in February last year.
- Shares fell 3.8% to $113.96 ahead of regular trading in New York. UPS climbed almost 22% this year through Monday, slightly ahead of a 20% gain for a Standard & Poor’s index of U.S. industrial companies. FedEx slid 5.8% during the period.
