FedEx Corp. warned Thursday it’ll likely miss Wall Street’s first-quarter profit target and said it expects business conditions to help expand weaken in its fiscal second quarter amid weaker global volume.
The Memphis, Tennessee-based package delivery company also scrapped its forecast for fiscal 2023 earnings, which it issued significantly less than 90 days ago.
For the 90 days ended August 31, FedEx projected 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, in accordance with FactSet.
Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S., FedEx CEO Raj Subramaniam said in a statement. We have been swiftly addressing these headwinds, but given the speed of which conditions shifted, first-quarter email address details are below our expectations.
The companys FedEx Express business was particularly hurt by service challenges in Europe and weaker economic trends in Asia, which resulted in a roughly $500 million revenue shortfall for the segment. FedEx Ground revenue, meanwhile, came in about $300 million below the companys forecasts.
High operating expenses were also a drag on the companys results, FedEx said.
In response, FedEx said it’ll aggressively spend less by closing over 90 FedEx Office locations and five corporate offices, deferring new hires and operating fewer flights.
Subramaniam noted he remains confident FedEx will achieve its fiscal year 2025 financial targets.
For the existing quarter, which leads to November, FedEx expects revenue to range between $23.5 billion and $24 billion, and adjusted earnings per share of at the very least $2.75. Wall Street analysts had expected adjusted earnings per share of $5.48 and $24.86 billion in revenue, in accordance with FactSet.
The business still plans to get back $1.5 billion of FedEx common stock in fiscal 2023. The business expects to get back $1 billion of FedEx common stock through the second quarter.
Shares in FedEx sank 16.3% in after-hours trading Thursday following release of its preliminary results and outlook. The shares ended regular trading down 0.1% and so are down 20.8% up to now this season.