FedEx Cuts Forecast After Tough Quarter for Deliveries
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FedEx Corp. cut the top end of its full-year profit outlook and reported quarterly earnings below expectations on softer demand for package deliveries.
In what CEO Raj Subramaniam called “a challenging quarter,” the Memphis, Tenn.-based company said it was hurt by lower demand for priority services as customers traded down to cheaper shipping options.
FedEx shares slid as much as 14% after the close of regular trading Sept. 19 and were down 8.91% to $273.5 as of 4:38 p.m. in New York. Rival UPS Inc. fell 2.8%.
The earnings report comes a day after the Federal Reserve made its first interest rate cut since 2020, a policy shift that reflects growing concern about the labor market as job gains have slowed and inflation cools. FedEx is considered somewhat of an economic bellwether due to its wide exposure to industries stretching across the global economy, from retail to manufacturing.
Adjusted earnings for the current fiscal year will be $20 to $21 a share, the company said Thursday, below its previous forecast for as much as $22 a share.
FedEx is in the process of integrating its Ground and Express delivery networks as part of a wider cost-cutting drive. Subramaniam said the company remains on track for savings of $2.2 billion this fiscal year.
For the quarter ending Aug. 31, it reported adjusted earnings per share of $3.60, well below analyst expectations for $4.77 and the $4.37 it reported a year ago. Revenue came to $21.6 billion, slightly below the $21.9 billion estimated by analysts.
This marks the first quarter that FedEx used new reporting segments after consolidating its Express, Ground and Services operating companies on June 1.
FedEx ranks No. 2 on the Transport Topics Top 100 list of the largest for-hire carriers in North America, No. 3 on the TT 50 list for largest global freight carriers, and No. 34 on the TT 100 list of logistics companies.
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