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FedEx disappointed investors Thursday with a surprise earnings miss.
Benoit Doppagne/BELGA/AFP via Getty Images
FedEx
stock was tumbling after the company doubly disappointed investors Thursday announcing weak quarterly results earlier than expected while withdrawing its full-year financial guidance.
The stock was down more the 12% in after-hours trading after
FedEx
(ticker: FDX) said it earned $3.44 a share from $23.2 billion in sales in its fiscal 2023 first quarter which ended in August. Wall Street was looking for $5.10 in per-share earnings from $23.5 billion in sales.
Sales were close, but management said revenue was impacted by “global volume softness.” The economy is slowing. Costs are a problem.
All that led to FedEx withdrawing its guidance for the full year. Back in June, the company said it expected to earn between $22.50 and $24.50 a share.
“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” said CEO Raj Subramaniam in a news release. “These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”
FedEx wants to increase operating profit by $3 billion to $4.5 billion compared with fiscal year 2022, when it earned about $6.9 billion.
Investors aren’t thinking about the long term now. Shares are falling and through Thursday trading, FedEx stock was off about 21% year to date. The
S&P 500
and
Dow Jones Industrial Average
are down about 18% and 15%, respectively.
United Parcel Service
(UPS) UPS stock has held up a little better dropping about 14% so far in 2022. But shares are dropping, down more than 5%, after the disappointing from FedEx.
UPS didn’t immediately respond to a question about current business trends, but the company expects to generate about $102 billion in sales in 2022. That implies about $53 billion in second-half 2022 sales, up about 4% compared with the second half of 2021. Sales grew by about 6% year over year during the first half of 2022.
UPS doesn’t have 2023 guidance yet. Its fiscal year end falls in December.
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 allen.root@dowjones.com
