Your FedEx Package Arrived Early

Image source: Iv-olga - Shutterstock

What's going on?

Delivery giant FedEx gave a profit warning on Friday after woeful quarterly results.

What does this mean?

FedEx wasn’t due to report its quarterly results until later this week, but looks like it wanted to rip off the band aid: the delivery giant blurted out that spluttering demand across Asia and Europe stunted the amount of goods it shipped. And business can hardly have boomed in the US either: separate data showed the number of shipping containers arriving into Los Angeles – the country’s busiest port – dipped last month by the most since the early days of the pandemic (tweet this).

Those worldwide trends really did a number on FedEx: the delivery giant’s profit from last quarter came in well below analysts’ expectations, and it said things are unlikely to pick up anytime soon since demand’s only going south. That forced FedEx to scrap its annual earnings forecast – one that was only freshly set in June.

Why should I care?

Zooming in: Big plans, big backlash.
FedEx has big plans to – here’s a novel twist – cut costs and boost productivity, including shuttering nearly 100 offices, parking aircrafts, shunning projects, and slimming hiring and workers’ hours. Unsurprisingly, investors weren’t best pleased: they pushed FedEx’s stock to its biggest one-day drop since it listed over 40 years ago, shaving around $11 billion off the company’s market value.

For markets: An unwanted delivery.
Your new scarf arriving late is the least of your worries: FedEx is considered an economic bellwether, since the success of its sprawling deliveries can hint at the state of the global economy. That might be why shares of other players in the commerce space – including Amazon and FedEx’s rival UPS – slipped after the news, while fears of wider knock-on effects meant the S&P 500 and Nasdaq fell far enough to put US stock indexes on course to finish this week in a slump.

Originally posted as part of the Finimize daily email.

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