FedEx cuts profit forecast amid economic challenges

In the United States, FedEx has recently decreased its profit outlook for the third consecutive quarter due to pressures from inflation and a decline in demand for shipping services. During a conference call with analysts, CEO Raj Subramaniam highlighted the impact of higher-than-expected inflation and weakening consumer confidence on the company's financial performance. The global economic landscape, coupled with political uncertainties, is now a pressing concern for the company, which is often viewed as a barometer of economic health. As part of its revised forecast, FedEx now anticipates adjusted earnings per share in the range of $18.00 to $18.60 for the current fiscal year, a notable drop from its previous estimate of $19.00 to $20.00. Additionally, FedEx has acknowledged that revenue may be slightly lower compared to the previous year, which contrasts sharply with earlier expectations of flat sales. This downturn is consistent with broader market weaknesses, particularly those impacting industrial customers and international shipping demand as consumers pivot towards more economical delivery options. An expiration of FedEx’s contract with the US Postal Service further exacerbated volume declines, contributing to increased uncertainty surrounding FedEx’s ability to meet or exceed earnings expectations, This situation has caused FedEx's shares to plunge more than 5% in after-hours trading as investors react to the news. As of March 20, 2025, the company reported a 12% drop in its stock price year-to-date based on investor concerns regarding diminished e-commerce activity in a post-pandemic world and ongoing inflationary challenges. Furthermore, FedEx's revenue growth over the past three years has slowed considerably, averaging just 1.7% annually compared to the S&P 500’s 6.3% growth. Amid these challenges, FedEx is working on a strategy to reshape its operations, which includes combining its air and ground delivery networks. Additionally, plans are underway to spin off its freight division into a separate publicly traded entity, aimed at streamlining its operations and allowing it to concentrate on its core parcel delivery services. The company is navigating through a tumultuous economic environment marked by fears of inflation and geopolitical conflicts which could further complicate its operations. As such, market analysts are cautious, monitoring FedEx’s performance closely as it adapts to these evolving macroeconomic factors.