FedEx Drops Kinko's Name; Plans Charge

FedEx(FDX Quote) says it will drop the Kinko's name from its retail business service unit, change the name to "FedEx Office," and write down the value of the operation it acquired four years ago.

"Kinko's was primarily a copy and print-service provider when it was acquired in 2004," said Brian D. Philips, CEO of FedEx Office, in a prepared statement. "The name FedEx Office more accurately represents our broader role of providing superior information and services through our company-owned, digitally connected locations around the world."

FedEx will record a charge of approximately $891 million in its fiscal fourth quarter, including $515 million in noncash impairment charges related to the use of the Kinko's name, $367 million for goodwill and $9 million for other costs. The goodwill charge reflects a decline in the current value of the business segment, "in light of current economic conditions, the unit's recent and forecasted performance and the decision to reduce the rate of store expansion," FedEx said.

The charge, to be taken in the fiscal fourth quarter ended May 31, is equal to $696 million net of tax, or $2.22 a share.

FedEx paid $2.4 billion to acquire Kinko's from a New York equity firm, seeking a stronger retail presence so it could better compete with UPS(UPS Quote).

In May, Philips was named CEO of the division, and the unit's senior management team was reduced. Earlier, the unit's growth rate was slashed from 300 new stores in fiscal 2008 to about 80 in fiscal 2009. The intent is to focus on core revenue growth and increased shipping volume, which contribute about $1 billion in annual revenue to FedEx Express and FedEx Ground.