FedEx expects to cut costs by an extra $1 billion as earnings beat but sales come up well short of target

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FedEx earnings beat expectations, but sales fall short amid weaker demand

FedEx Corp. on Tuesday said it planned to slash an extra $1 billion in costs beyond what it outlined in September, bringing those total expected cuts to roughly $3.7 billion, amid what management called a “weaker demand environment” that led to softer-than-expected sales for its second quarter.

Adjusted for costs related to “business optimization,” FedEx FDX, -2.62% earned $3.18 a share, compared with $4.83 the same quarter in 2021. “The FedEx team moved with urgency to make rapid progress on our ongoing transformation while navigating a weaker demand environment,” said Raj Subramaniam, FedEx’s chief executive, in a statement. “Our earnings exceeded our expectations in the second quarter, driven by the execution and acceleration of our aggressive cost-reduction plans.”

FedEx forecast full-year earnings per share of $13 to $14. For the full fiscal year, FactSet forecast adjusted earnings of $13.93 a share, with revenue of $94.358 billion.FedEx’s financials and its stock over the past few months have been upended by a global drop in shipping demand — including for the key holiday season. In September, the company announced up to $2.7 billion in cost cuts for the fiscal year ahead as concerns grew about the direction of an inflation-scarred economy.

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FedEx is incompetent.

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