Local Economist Expects Rapid Rebound for FedEx after Dismal First Quarter Earning Report

Local Economist Expects Rapid Rebound for FedEx after Dismal First Quarter Earning Report
Published: Sep. 16, 2022 at 6:41 PM CDT

MEMPHIS, Tenn. (WMC) - Memphis-based FedEx is announcing several cost-cutting initiatives to offset a declining volume of packages.

Following the news, stocks fell broadly on Wall Street, leaving the market with another week of sizable losses.

The S&P 500 fell point-seven percent.

The Nasdaq lost almost one percent, and the Dow lost nearly half a percent.

FedEx’s first quarter earnings took a surprisingly deep tumble in its first quarter.

FedEx Express and FedEx Ground combined revenue was 800 million below company forecasts.

So, what’s behind the unexpected drop in revenue?

FedEx CEO Raj Subramaniam blames global volumes decline late in the quarter both internationally and in the U.S., pointing specifically to weakness in Asia and service challenges in Europe.

The company says this will add to aggressive cost reductions such as temporarily parking aircraft, deferral staff hiring, and decrease of Sunday operations at a number of FedEx Ground locations.

However, Memphis economist Dr. John Gnuschke said the changes are likely not to be felt too heavily here in the Mid-South.

“FedEx goes through cycles. This isn’t the first time,” said Gnuschke.

“They did it in 2018. They did it in 2020; now they’re doing it in 2022. We can expect FedEx to rebound rather rapidly.”

FedEx has over 500,000 employees across the globe.

FedEx would not comment on where they plan to close FedEx office locations.

A spokesperson did respond to our questions regarding season hiring.

Traditionally during the holidays, FedEx hires thousands of temporary employees; we asked if the lower-than-expected earnings would affect that hiring period.

A spokesperson said:

Our 550,000 employees worldwide are ready to deliver for this year’s peak season. We continue to hire for operational positions needed in certain locations and encourage anyone interested in a career at FedEx to visit careers.fedex.com to see the available positions in their market.

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