Management expects UTi Worldwide to earn between $0.98 and $1.02 per share, before restructuring expenses, for fiscal year 2008. The executives cited a slowdown in customer's businesses was hurting profitability. In addition, airfreight yields (difference between what UTIW customer's pay and how much 3rd party carriers charge UTIW to transport goods) contracted. Restructuring plans call for exiting underperforming businesses and cutting overhead.
Oil prices hit $100 per barrell. Transportation stocks sank as worries over the consumer mounted. Prices at gas stations, a weakening housing market, and rising unemployment appears to be huring consumer demand at stores. With less goods going off the shelf, trucking and logistics firms are shipping less goods, which hurts revenue.
UTi Worldwide will no longer provide logistics services to Wal-Mart Stores on March 1, 2008. Wal-Mart will bring in-house the services UTi Worldwide provided. UTi Worldwide said revenue would be $60 million lower and EPS would be cut 3 to 4 cents. This news compounded concern over UTi Worldwide's growth as the economy slows down and less goods are shipped. The stock fell over 20%.
