FedEx Corp. (NYSE: FDX) shares cratered by 7.3% on Wednesday morning after the Company missed its second quarter earnings and revenue estimates. Additionally, the Company also lowered its 2020 guidance.
For the quarter, FedEx reported earnings of USD 2.51 per share on revenue of USD 17.32 Billion. Refinitiv analysts expected earnings of USD 2.76 per share on revenue of USD 17.58 Billion.
FedEx reported that revenue declined from USD 17.8 Billion the same period a year ago, while earnings slipped from USD 4.03 per share. Overall, the Company reported that profits fell to USD 560 Million compared to USD 935 Million a year ago.
The Company noted that its weaker-than-expected quarterly earnings was due to weakening global economic conditions and the loss of business from “a large customers,” most likely hinting at Amazon (NASDAQ: AMZN).
On the earnings call, Alan Graf, Jr., FedEx. Executive Vice President and Chief Financial Officer, said that 60% of FedEx Ground’s year-over-year margin fell due to costs related to the rollout of its six and seven-day delivery methods, online holiday sales shifting to the third quarter as well as loss of Amazon volume.
As for the full-year, FeEx lowered its earnings outlook and now expects earnings between USD 10.25 to USD 11.50 per share compared to its previous expectations between USD 11.00 to USD 13.00 per share. Refinitiv analysts were expecting USD 12.03 per share.
“Our revised guidance reflects lower-than-expected revenue at each of our transportation segments and higher-than-expected expenses driven by continued mix shift to residential delivery services,” said Graf.
“In response, we are implementing reductions to the global FedEx Express air network to better match capacity with demand. We are also further restricting hiring and pursuing opportunities to optimize our networks, including investments in technology aimed at improving our productivity and lowering our costs,” concluded Graf.