FedEx will cut costs by closing over 90 FedEx Office locations and five corporate departments, postponing new hires and operating fewer flights.
FedEx said on Thursday, “It is shuttering storefronts and corporate offices while putting off new hires in a belt-tightening drive brought on by drop-off in its global package delivery business“.
The company established in Memphis, Tennessee, warned it will likely miss Wall Street’s profit target for its fiscal early quarter that ended Aug. 31. And it said it anticipates business situations to further weaken in the recent quarter amid vulnerable global volume.
Its stock drops more than 16% in after-hours trading following the statement.
“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 are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations.”
The company’s FedEx Express business was exceptionally weakened by challenges in Europe and vulnerable economic conditions in Asia, which directed to an approximately $500 million income shortfall for the section. FedEx Ground revenue, meanwhile, came in about $300 million below the company’s predictions.
High operating expenses were also a drag on the company’s results, FedEx said. “It will cut costs by closing over 90 FedEx Office locations and five corporate offices, deferring new hires and operating fewer flights“.
For the three months ended Aug. 31, FedEx now inaugurates adjusted earnings per share of around $3.44 and $23.2 billion in earnings. That’s below analysts’ agreement prediction of $5.14 adjusted earnings per share and $23.6 billion in revenue, according to FactSet.
Subramaniam reported that he continues confidently FedEx will achieve its fiscal year 2025 economic targets.
For the recent quarter, which ends in November, FedEx anticipates income to range between $23.5 billion and $24 billion and adjusted earnings per share of at least $2.75. Wall Street analysts had predicted adjusted earnings per share of $5.48 and $24.86 billion in revenue, according to FactSet.
The company still plans to buy back $1.5 billion of its common stock in fiscal 2023. It expects to buy back $1 billion of its widespread stock during the following quarter.
