- FedEx shares fell nearly 24% Friday, as FedEx scrapped its financial guidance.
- Due to the rapid decline in global economic conditions, it now requires a lower quarterly profit.
- The economic bellwether will shut down 90 offices, stop hiring and keep planes on the ground.
FedExShares plunged more than 24% Friday, after the company issued an earnings warning and scrapped its previous guidance for the year. This was in response to the worsening global economic situation.
The delivery giant for package delivery said that delivery volumes decreased in recent months as global economic activity slowed down in August. It now expects global consumption to drop further in the next quarter. The financial outlook for fiscal 20203, which was released three months ago, has been withdrawn.
FedEx provided a financial update Thursday, revealing revenue and profit for the three-month period ending August 31, which fell short of Wall Street targets. Key factors were macroeconomic weakness in Asia, and European service challenges.
Questions by Jim Kramer, CNBCFedEx CEO Raj Subramanian was asked if he expected the economy to enter a worldwide recession. But you know, again — these numbers, don’t portend very well.”
According to the company’s plans, 90 offices will be closed. Employers are asked to stop hiringAs part of a cost-cutting effort, keep planes on the ground. It will reduce spending from $6.8 to $6.3 billion in the next year.
FedEx shares dropped 23.9%, to $155.62, after the publication of preliminary fiscal-first-quarter results. As of Friday’s opening bell the stock had dropped 21% in the year compared to the S&P 500′s 16% fall.
Subramanian stated that global volumes fell as macroeconomic trends in the US and internationally deteriorated. In a company announcement.
“We are rapidly addressing these headwinds,” he said. However, given the speed atwhich conditions have changed, first quarter results are lower than our expectations.”
FedEx sees a profit now of $3.33 per Share for its first quarter. This compares to Wall Street’s estimate of $5.14 per Share. Although revenue increased 5% to $23.2 billion from a year earlier, it still falls below expectations of $23.6 billion.
FedEx is often considered an economic bellwether as its results reflect the demand it provides for a wide variety of goods. The shares are now at their lowest level since August 2020.
This article was updated to reflect stock price at the opening of markets.
