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Well, at least one major group with “Fed” in its name got to report exciting news this week. FedEx? Not so much.
The link between the Federal Reserve and FedEx is more than name-deep, though. When the Fed(eral Reserve) cut rates earlier this week, the central bank stressed the health of the US economy. But Fed(Ex), which can serve as a canary in the coal mine for the economy, is telling a different story.
“The magnitude of the Fed rate cuts yesterday signals the weakness of the current environment,” FedEx CEO Raj Subramaniam said on the company’s earnings call.
FedEx’s Q1 report showed some weakness: The shipping giant reported a sharp drop in quarterly profit, citing reduced demand for its pricier delivery options. The company also lowered its full-year outlook.
FedEx posted net income of $790 million for the quarter, down from $1.1 billion in the same quarter last year. Revenue dipped to $21.6 billion, a 0.5% fall and a slight miss from analyst estimates, per the Wall Street Journal.
“Despite a challenging quarter, we remain focused on transforming our network, improving our efficiency, lowering our cost-to-serve, and enhancing our ability to adapt with speed to evolving market dynamics,” Subramaniam said in the earnings report, adding that he “remain[s] confident in the value-creation opportunities ahead as we focus on reducing our structural cost” and “growing revenue profitably.”
The company now expects per-share earnings between $17.90 and $18.90 in fiscal 2025, down from a previous prediction of $18.25 to $20.25. FedEx also updated its revenue growth projection, now expecting it to grow in the low single digits as opposed to a prior forecast of low- to-mid-single-digit growth.