Shares of FedEx plunged more than 19% in premarket trading on Friday after the company issued a profit warning and cut its previous profit guidance for the year, linking the move to a worsening global economy.
The package delivery giant said delivery volumes fell in recent months as a slowdown in global economic activity accelerated in August. It now expects global demand to fall further next quarter, prompting it to withdraw the financial outlook for fiscal 2023 it released just three months ago.
In a financial update Thursday, FedEx reported revenue and profit for the three months to Aug. 31 that missed Wall Street targets. She identified macroeconomic weakness in Asia and problems with services in Europe as key factors.
It said it plans to close 90 offices, freeze hiring and ground planes as part of cost-cutting efforts. His goal is to reduce spending from $6.8 billion to $6.3 billion next year.
FedEx shares fell 19.2% to $165.50 after releasing preliminary fiscal first-quarter results. The stock is down 21% in the year since Thursday’s close, compared with about 16% for the S&P 500.
“Global volumes declined as macroeconomic trends worsened significantly later in the quarter, both internationally and in the U.S.,” FedEx CEO Raj Subramanian said in a statement.
“We are quickly addressing these headwinds, but given the speed with which conditions have changed, the first quarter results are below our expectations,” he added.
FedEx now sees earnings of $3.33 per share for the first quarter, compared to the Wall Street forecast of $5.14 per share. While revenue rose 5% from a year earlier to $23.2 billion, it still fell short of expectations of $23.6 billion.
FedEx is often considered an economic partner because its results reflect demand for the wide range of goods it delivers. The stock has now fallen to its lowest level since August 2020.
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