Package-delivery giant FedEx Corp. reports full fiscal first-quarter results on Thursday, as the smoke clears following grim financials and cost-cutting plans issued last week that sent the company’s stock on its biggest weekly drop since 1987 and led to bigger concerns about the U.S. economy.
“I think I’d be looking for insight into what changed since June, that they didn’t see the volume trends deteriorating as rapidly as they did, with such significant lost operating leverage,” Morningstar analyst Matthew Young told MarketWatch. The earnings-per-share figure was also below the $5.16 from Estimize, a platform that collects those estimates from Wall Street analysts, fund managers, executives and other researchers.
What else to expect: In particular, FedEx said its Express business — which offers expedited shipping to any U.S. address and service on air and ground to dozens of nations — suffered from “macroeconomic weakness in Asia and service challenges in Europe,” leading to a roughly $500 millions sales shortfall in the unit, compared to FedEx’s own forecasts. Sales in FedEx’s Ground business, whose trucks deliver packages between businesses and residences in the U.S.
“As we all know, FedEx is no ordinary economic actor, as its business literally touches every corner of the global economy,” Sheraz Mian, director of research at Zacks, said in a report on Friday. “The shortfall in FedEx Ground, the unit that is tied closely to e-commerce deliveries in the U.S., has read-through implications for the U.S. consumer and operators in the digital economy. This is significant since the next few months of the year include the holiday shopping season.
Elsewhere, Stephens analyst Jack Atkins, in a note on Friday, said he sensed that FedEx’s plans to shrink costs were “incremental” to a three-year plan FedEx outlined at its analyst day at the end of June.
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