The stock was falling after the company doubled down on investors on Thursday and reported weak quarterly results earlier than expected while withdrawing its full-year financial guidance.
The stock fell more than 12% in the post-closing trading period thereafter
(Stock ticker: FDX) said it earned $3.44 per share from $23.2 billion in sales in the first quarter of fiscal 2023 that ended in August. Wall Street was looking for $5.10 in earnings per share from $23.5 billion in sales.
Sales were close, but management said revenue was affected by “softer global volume.” The economy is slowing down. Costs are also a problem. The company will close more than 90 FedEx office locations, slowing hiring, And incorporate some packet sorting, among other measures, to save you some money.
All this led to FedEx withdrawing its guidance for the entire year. Last June, the company said it expects to earn between $22.50 and $24.50 per share.
“The results were much worse than we had feared,” Citi analyst Christian Wetherby wrote in a report Thursday. And anticipate some struggle for the company, too. Wetherbee downgraded the stock to hold it from buy on September 6. FedEx Express parcel delivery company missed its estimates, and FedEx ground business, which provides lower cost, delivery of packages on a given day, was also weak. FedEx’s shipping business was better than Wetherbee expected.
“While this performance is disappointing, we are aggressively accelerating cost-cutting efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” CEO Raj Subramaniam said in a press release. “These efforts are in line with the strategy we outlined in June, and I remain confident that we will achieve our financial goals for fiscal year 2025.”
FedEx wants to increase its operating profit by $3 billion to $4.5 billion compared to fiscal year 2022, when it earned about $6.9 billion.
Investors are not thinking about the long term now. Stocks drop and during Thursday’s trading, FedEx stock is down nearly 21% since the beginning of the year. The
Standard & Poor’s 500
Dow Jones Industrial Average
by 18% and 15%, respectively.
United Parcel Service
(UPS) UPS stock has held up a little better, down about 14% so far in 2022. But shares are down, more than 5%, after the disappointment from FedEx.
UPS declined to comment on current business trends. The company expects to generate about $102 billion in sales in 2022. This means about $53 billion in sales in the second half of 2022, an increase of about 4% compared to the second half of 2021. Sales grew about 6% year-over-year during the first half of the year 2022.
For his part, Wetherbee does not believe UPS will be as affected by the current environment as UPS, adding that UPS reiterated its guidance this month.
Investors may still send UPS stock lower, too. FedEx and UPS won’t be the only stocks caught up in the fallout. Other logistics providers will be hit. Investors can see where it spreads from there.
Write to Al Root at email@example.com
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