FedEx FDX, -0.07% said its fiscal first quarter was affected by lower sales volumes worldwide, a trend that worsened toward the end of the quarter. It expects its business conditions to “weaken further” in the second fiscal quarter.
The company called for preliminary first-quarter adjusted earnings of $3.44 per share on sales of $23.3 billion.
Analysts polled by FactSet expect the company to report adjusted EPS of $5.14 on sales of $23.6 billion in the quarter when it reports a full financial snapshot on Sept. 22.
FedEx blamed “macroeconomic weakness” in Asia and “service challenges” in Europe for the $500 million revenue shortfall in those regions. In addition, revenue from FedEx Ground is about $300 million below the company’s forecasts, the company said.
FedEx pledged to cut costs “aggressively” and said it was looking at other ways to “enhance productivity.”
Among other moves, FedEx said it will close more than 90 FedEx Office locations as well as five corporate offices and postpone new hires.
Just three months ago, FedEx gave investors a more favorable outlook for fiscal 2023.
In June, the company said its FedEx Express business improved in part thanks to fuel surcharges. But it had already warned that volumes were low globally due to pandemic lockdowns and economic and geopolitical uncertainty in Asia and beyond. It also reported FedEx Ground’s lower operating results.
In addition to withdrawing its fiscal 2023 outlook, FedEx called for revenue of $23.5 billion to $24 billion and adjusted EPS of $2.75 “or higher.” That contrasted with expectations for EPS of $5.48 on sales of $24.9 billion in the quarter, according to FactSet.
FedEx cut capital spending to $6.3 billion, compared with an earlier forecast of $6.8 billion. The company kept its $1.5 billion share buyback plan intact, saying it expects to buy back $1 billion in the fiscal second quarter.
FedEx stock has lost 21% so far this year, compared with losses of about 16% for the S&P 500. SPX, -1.13%
