FedEx says a drop-off in its global package delivery business has triggered a belt-tightening move.
The company said Thursday it is closing storefronts and corporate offices while putting off new hiring.
The news has FedEx shares plunging 19% in premarket trading.
The company also said it will likely miss Wall Street’s profit target for its fiscal first quarter, and it expects business conditions to further weaken in the current quarter.
FedEx Corp. previously announced plans to cut back on Sunday delivery. (iStock / iStock)
"Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.," FedEx CEO Raj Subramaniam said in a statement. "We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations."
The challenges in Europe and Asia led to a roughly $500 million revenue shortfall.
FedEx Ground revenue, meanwhile, came in about $300 million below the company’s forecasts.
The company will cut costs by closing over 90 FedEx Office locations and five corporate offices, deferring new hires and operating fewer flights.
A cargo plane is refueled on the tarmac at the FedEx Corp. distribution hub at Los Angeles International Airport. (Patrick T. Fallon/Bloomberg via Getty Images / Getty Images)
The company scrapped its forecast for its earnings in its current fiscal year that it had issued less than three months ago.
FedEx now projects adjusted earnings per share of $3.44 and $23.2 billion in revenue. That's below analysts' consensus forecast of $5.14 adjusted earnings per share and $23.6 billion in revenue, according to FactSet.
Ticker Security Last Change Change % FDX FEDEX CORP. 204.85 -0.20 -0.10%
Subramaniam noted that he remains confident FedEx will achieve its fiscal year 2025 financial targets.
A FedEx Express courier prepares numerous packages inside a delivery truck parked on the street. (Budrul Chukrut/SOPA Images/LightRocket via Getty Images / Getty Images)
For the current quarter, which ends in November, FedEx expects revenue to range between $23.5 billion and $24 billion, and adjusted earnings per share of at least $2.75.
Wall Street analysts had expected adjusted earnings per share of $5.48 and $24.86 billion in revenue, according to FactSet.
The Associated Press contributed to this report.