FedEx's quarter-end profit below estimates as customers' need for quick delivery declines

On Thursday, FedEx revealed a sharp decline in its quarterly profit and revised down its full-year revenue projection as its clients continued to switch from expensive, quick delivery to less expensive, delayed options.

In after-hours trading, shares of the massive delivery company based in Memphis fell nearly 11% to $267.74, pulling down those of competitor United Parcel Service.

decreasing 2.5%.

FedEx and UPS are seeing a decline in profits due to the shift to less profitable shipments. FedEx referred to a decrease in priority shipments between companies, while the latter blamed an onslaught of volume from China-linked e-commerce players that Reuters named as Temu and Shein.

Industry demand, according to CEO Raj Subramaniam, was not as strong as anticipated. FedEx sees its most profitable shipments between manufacturers and other businesses in that sector as a leading indicator of the US economy.

Referring to the Federal Reserve's decision to lower interest rates by half a percentage point on Wednesday, Subramaniam stated, "The magnitude of the Fed rate cuts yesterday signals the weakness of the current environment."

At FedEx, Subramaniam is spearheading a complicated reorganization that will combine its distinct Ground and Express delivery divisions and save billions of dollars in overhead costs.

In the most recent quarter, FedEx reported that one fewer operational day and sluggish demand for profitable priority services were too much of a drag to be overcome by cost reductions.

The company now projects a low single-digit percentage growth in revenue for the fiscal year 2025. Previously, low-to-mid single-digit percentage increase was required.

Additionally, FedEx reduced its previously stated range of $20 to $22 per share for its full-year adjusted operating income to between $20 and $21 per share.

Profit decreased to $3.60 per share on an adjusted basis from $4.55 per share in the previous year.

FedEx is reducing its contract work with the US Postal Service, which is its biggest client. The company anticipates losing the contract for $500 million this fiscal year.

On September 29, FedEx's unprofitable USPS air contract, which brought in roughly $1.75 billion for the company in the most recent fiscal year of the postal service, will come to an end. UPS took over that company. (*)

The background of FedEx

When FedEx was first founded in 1971, it was known as Federal Express. Frederick W. Smith began with a ground-breaking concept to establish an airline to address the logistical issues that companies were facing. The first overnight packages were picked up and delivered in 1973, marking the start of operations.

An American chain of retail stores called FedEx Office offers services including shipping, printing, copying, and binding. The following are some facts regarding FedEx Office:
FedEx Kinko's and Kinko's was the previous name of FedEx Office.
Although FedEx ceased using the Kinko's name in 2008, the brand is still in use.

Unlike The UPS Store, a rival company, which is a franchise, FedEx Office owns every store.

FedEx Express and FedEx Ground delivery services (including Home Delivery) are offered by FedEx Office.

Additionally, FedEx Office offers binding, copying, and printing services.

Flyers, posters, presentations, and more can be printed online with FedEx Office's online printing service.

You can pick up your online or in-person service order at a FedEx Office location after placing it.

Additionally, shipping is free for orders totaling $100 or more.

FedEx's number toll-free for shipping inquiries and issues is 1.800.GoFedEx (1.800.463.3339).

FedEx's founder

Frederick W. Smith, a 1966 Yale College graduate who was born in Marks, Mississippi, founded FedEx Corporation and currently serves as its executive chairman of the board of directors. While still a student, he conducted the initial assessments about the logistic requirements of a highly automated future society. (*)