(Reuters) -FedEx Corp said on Thursday its fiscal first-quarter results were hit by global volume softness that accelerated at the end of the period, and withdrew its financial forecast as it expects business conditions to worsen in the second quarter.
The warning, which pushed FedEx (NYSE: FDX) shares down over 15% in after-hours trading, lands as investors, including activist D.E. Shaw, pressure FedEx’s new Chief Executive Officer Raj Subramaniam to improve margins and close a widening profitability gap with rival United Parcel Service Inc (NYSE: UPS).
UPS’s shares fell over 5%, while Amazon.com Inc (NASDAQ: AMZN) dropped 2% after the news.
Consumers around the world are grappling with higher costs for necessities like food, fuel and shelter as the same time as they are shifting spending away from goods and back to restaurants, travel and other pre-pandemic activities.
FedEx said the global volume softness it experienced accelerated in the final weeks of its fiscal first quarter ended Aug. 31 and cut revenue in the FedEx Express business by $500 million.
It expects adjusted earnings of $3.44 per share in the first quarter, well below analysts’ average expectations of $5.14, according to Refinitiv IBES. That comes after analysts had already tempered expectations for the quarter.
Hoping to fight the market weakness, FedEx implemented a string of cost-cutting measures, but “the impact of cost actions lagged volume declines, and operating expenses remained high relative to demand,” it said in a statement.
FedEx executives in June said they planned to take costs out of the Ground unit – a move that could add to its contractors’ financial stress.
