FedEx said Thursday it is closing storefronts and corporate offices while laying off new employees in a belt-tightening campaign brought on by drop-off in its global package delivery business.
The Memphis, Tennessee-based company warned it would miss Wall Street’s profit target for its fiscal first quarter ending Aug. 31. And it said business conditions are expected to further weaken in the current quarter amid weak global volumes.
Its stock fell more than 16% in after-hours trading following the announcement.
“Global volumes declined as macroeconomic trends worsened significantly later in the quarter, both internationally and in the US,” FedEx CEO Raj Subramaniam said in a statement. Quarterly results are below our expectation.”
The company’s FedEx Express business was particularly hurt by challenges in Europe and weak economic trends in Asia, which led to a nearly $500 million revenue loss for the segment. Meanwhile, FedEx ground revenue fell short of the company’s forecast by about $300 million.
FedEx said higher operating expenses were also a drag on the company’s results.
In response, it said it would cut costs by closing more than 90 FedEx office locations and five corporate offices, postponing new appointments and operating fewer flights.
The company scrapped its earnings forecast for its current fiscal, which it had released less than three months ago.
For the three months ended August 31, FedEx now projects adjusted earnings per share of $3.44 and $23.2 billion in revenue. That’s below analysts’ consensus forecast of $5.14 adjusted earnings per share and $23.6 billion in revenue, according to FactSet.
Subramaniam said he is confident that FedEx will achieve its fiscal year 2025 fiscal goals.
For the current quarter ending in November, FedEx expects revenue to be between $23.5 billion and $24 billion, and adjusted earnings per share of at least $2.75. Wall Street analysts were expecting adjusted earnings per share of $5.48 and revenue of $24.86 billion, according to FactSet.
The company still plans to buy back $1.5 billion of its common stock in fiscal year 2023. It expects to buy back $1 billion of its common stock during the second quarter.
This story has been published without modification in text from a wire agency feed.
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