Operating income and margin during the quarter improved due to revenue growth, revenue management and effective cost controls. Last year's first quarter operating margin was negatively affected by a one-time, noncash charge of $75 million recorded primarily to adjust the accounting for rent escalation terms in certain facility leases, which reduced last year's first quarter operating margin by 1.4 percentage points.
FedEx Kinko's revenues decreased year over year primarily due to lower copy product revenues attributed to decreased demand and a continued competitive pricing environment for these services.
The operating margin decline was primarily due to the revenue decline, along with services enhancement costs and network expansion initiatives.
In August, FedEx Kinko's announced the details of a multi-year network expansion plan, including the model for new lower-cost centers which will be approximately one-third the size of a traditional center, and will include enhanced pack-and-ship stations and a doubling of the number of office products offered.
FedEx Kinko's opened 31 new locations during the first quarter, and plans to open a total of approximately 200 new centers during the fiscal year.
marketing@alchempro.com
