FedEx Express to Incur $500M ‘Revenue Shortfall’ for Fiscal Q1

FedEx became a bellwether of bad macroeconomic trends when it disclosed Thursday that results for its fiscal Q1 ended Aug. 31 “were adversely impacted by global volume softness that accelerated in the final weeks of the quarter.” FedEx Express results were “particularly impacted” by “macroeconomic weakness in Asia and service challenges in Europe,” causing a $500 million “revenue shortfall” compared with the company’s June 23 forecasts, it said. FedEx Ground revenue was about $300 million below projections, it said. “While the company took immediate and decisive action to adjust its cost base, the impact of cost actions lagged volume declines, and operating expenses remained high relative to demand,” it said. The disclosures sent the stock plunging 24% Friday to a new 52-week low of $155.18 before closing 21.4% lower for the day at $161.02. FedEx is taking significant austerity steps to bring costs in line with lower shipping volume, it said. It's imposing a hiring freeze and canceling network capacity expansion, plus reducing “flight frequencies” and “labor hours” and scaling back Sunday operations at “a number” of FedEx Ground locations, it said. It’s also closing more than 90 FedEx Office retail locations and shutting down five “corporate office facilities,” it said. “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.," said CEO Raj Subramaniam. "We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations.” FedEx is to report fiscal Q1 results Thursday.