FedEx shares experienced a significant decline of over 10% in premarket trading following the package delivery giant’s decision to lower its revenue forecast. Weaker demand has impacted sales, leading the company to anticipate a low-single-digit decline in revenue for the fiscal year, down from its previous forecast of flat year-over-year sales. Analysts had initially expected a revenue drop of less than 1% for the current fiscal year.
This marks the second consecutive quarter in which FedEx has revised its sales outlook. The company highlighted challenges in its Express unit, its largest, citing lower demand, surcharges, and customers shifting to more affordable services.
Despite the revenue challenges, FedEx expressed optimism about improving operating income, attributing it to the implementation of its cost-cutting plan. The company reported net income of $900 million, or $3.55 per share, for the three-month period ending November 30, compared to $788 million, or $3.07 per share, in the same period the previous year. Adjusted earnings of $3.99 per share fell short of analysts’ expectations. Revenue for the quarter declined by 3% to $22.17 billion compared to the previous year.
