{"id":25375,"date":"2023-06-21T06:08:18","date_gmt":"2023-06-21T10:08:18","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/cost-cuts-lifted-fedexs-stock-after-its-past-two-earnings-reports-the-third-time-wasnt-a-charm\/"},"modified":"2023-06-21T06:08:21","modified_gmt":"2023-06-21T10:08:21","slug":"cost-cuts-lifted-fedexs-stock-after-its-past-two-earnings-reports-the-third-time-wasnt-a-charm","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=25375","title":{"rendered":"Cost cuts lifted FedEx\u2019s stock after its past two earnings reports. The third time wasn\u2019t a charm."},"content":{"rendered":"
\n

Since September, shares of FedEx Corp. have been on an upswing, rolling higher after the past two earnings reports, as the package deliverer\u2019s efforts to cut billions in costs helped investors move past lagging consumer demand. But on Tuesday, the bottom-line gains the company said it expected from its moves to get leaner weren\u2019t enough for Wall Street. <\/p>\n

Shares of FedEx
\n FDX,
\n -0.78%<\/bg-quote>
\n slid after hours on Tuesday after management offered up a full-year profit forecast that fell short of analysts\u2019 expectations, and the company pointed to weaker demand in the months ahead, as inflation hangs on and forces customers to rethink their spending priorities. <\/p>\n

\n

Not long after the company released those results, FedEx also said
\n FDX,
\n -0.78%<\/bg-quote>
\n that Chief Financial Officer Michael Lenz would retire on July 31. Management said it had begun an external search to fill the position. Lenz, who became CFO in March 2020, will serve as a senior adviser until Dec. 31 to help with the changeover. <\/p>\n

\u201cWe\u2019re entering fiscal 2024 with a continued focus on areas within our control and a commitment to execute swiftly on our priorities,\u201d Chief Executive Raj Subramaniam said during the company\u2019s earnings conference call with Wall Street analysts. \u201cThis focus will support sustained profit improvement in FY 2024 through an environment that we expect to remain marked by demand challenges, particularly in the first half.\u201d<\/p>\n

Shares fell 3% after hours on Tuesday. <\/p>\n

For the fiscal year ahead, which ends next May, FedEx forecast \u201cflat to low-single-digit-percent\u201d\u00a0growth in sales, with earnings per share of $16.50 to $18.50. The company said it expects permanent reductions from its cost-cutting program \u2014 which it calls \u201cDRIVE\u201d \u2014 of $1.8 billion. <\/p>\n

For the full year, analysts expected FedEx to earn $18.33 a share, on $90.91 billion in sales. FedEx ended its most recent fiscal year with $90.2 billion in sales. <\/p>\n

\u201cWhile some investors were pessimistic about FDX\u2019s guide going into the print, we believe most were expecting FDX to at least guide in line with consensus at the mid-point,\u201d Stephens analyst Jack Atkins said in a research note on Tuesday.<\/p>\n

FedEx has tried to slash at least $4 billion in costs by the end of its fiscal 2025, amid slowing demand for package deliveries. In the process, the delivery service\u2019s stock price has rebounded since getting slammed in September, when it warned of a slowdown that was seen as a proxy for the rest of the U.S. economy. It has nudged shipping prices higher, cut flights, cut executive jobs and closed offices. In April, FedEx announced plans to consolidate its air and ground operations into a single organization.<\/p>\n

The company reported fourth-quarter net income of $1.54 billion, or $6.05 a share, compared with $558 million, or $2.13 a share, in the same quarter last year. Revenue fell to $21.9 billion, compared with $24.4 billion in the prior-year quarter. <\/p>\n

Adjusted for goodwill, efforts to make the business leaner and a legal issue within FedEx\u2019s
\n FDX,
\n -0.78%<\/bg-quote>
\n ground delivery operations, FedEx earned $4.94 a share, compared with $6.87 a year ago.<\/p>\n

Analysts polled by FactSet expected adjusted earnings per share of $4.85, on revenue of $22.55 billion. <\/p>\n

\u201cThe quarter\u2019s results were negatively affected by continued demand weakness and cost inflation, partially offset by cost-reduction actions and U.S. domestic package yield improvement,\u201d management said in a statement. <\/p>\n

The company also reported earnings amid other tensions within the nation\u2019s shipping and transportation infrastructure, after online-shopping demand during the pandemic led to higher shipping prices and thus a surge in profits.<\/p>\n

While West Coast dockworkers and their employers reached a tentative deal on a contract last week, Teamsters union members at FedEx\u2019s main rival, United Parcel Service Inc.
\n UPS,
\n -0.73%<\/bg-quote>,<\/span>
\n voted to authorize a strike if UPS doesn\u2019t offer them a contract they don\u2019t like. The friction has led to worries that businesses and customers would have to pay more to have products delivered.<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Since September, shares of FedEx Corp. have been on an upswing, rolling higher after the past two earnings reports, as the package deliverer\u2019s efforts to cut billions in costs helped investors move past lagging consumer demand. But on Tuesday, the bottom-line gains the company said it expected from its moves to get leaner weren\u2019t enough […]<\/p>\n","protected":false},"author":1,"featured_media":25376,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-25375","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nCost cuts lifted FedEx\u2019s stock after its past two earnings reports. 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