FedEx to cut $2 billion in costs

MEMPHIS, Tenn. (WMC) - FedEx is expected to cut $2 billion in costs after first-quarter earnings results plummeted.

FedEx made $23.2 billion in revenue for the 2023 fiscal year’s first quarter, which is a 5.4% increase from the previous fiscal years first quarter of $22 billion.

The company also reports an adjusted net income of $905 million, a 23.9% decrease from last year’s revenue of $1.19 billion.

FedEx released a preliminary earnings report last week for its first quarter in which it withdrew its guidance for the fiscal year 2023 and cited that the slowing of the economy was the cause.

CEO Raj Subramaniam said, “We’re moving with speed and agility to navigate a difficult operating environment, pulling cost, commercial, and capacity levers to adjust to the impacts of reduced demand, As our team continues to work aggressively to address near-term headwinds, we’re meaningfully strengthening our business and customer experience, including delivering an outstanding peak.”

Some of the cost savings will come from closing FedEx offices and corporate office locations and decreasing vendor activity to save $350 million to $500 million.

The rest will come from closing FedEx Ground locations, suspending Sunday operations, and reducing flight frequencies for FedEx Express.

This will save FedEx Ground $350 million to $500 million and FedEx Express $1.5 billion to $1.7 billion.

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