Shares of FedEx are down 9.2% and traded today at the lowest since May 2023. That comes on a lower earnings guide and concerns about the macro economy. There were some revealing details in the conference call.

CEO Raj Subramaniam noted some of thing things that have been weighing on the economy.

“Weakness in the industrial economy continued to pressure our higher-margin B2B volumes,” he said. “The current environment, however, is adding uncertainty to demand.”

Perhaps most-interesting was a comment from Brie Carere, FedEx’s Chief Customer Officer who said this:

“From an outlook perspective, we think that we have given you a very prudent forecast for the fourth quarter and that this incorporates the feedback that we’ve had from our customers around the world. I would say that from a feedback perspective, I think first, the #1 thing that we keep getting asked is has there been a pull forward. We did not see any significant pull forward in Q3 [their FY ends May 31]. We did see a little volatility in APAC kind of at the end of February, early March. But for the most part, a pull forward is really hard, so we have not seen that, actually. In all the sales calls that I’ve done over the last 90 days, I’ve actually only met one customer who attempted it and they regretted it because they ended up storing some excess inventory.”

That goes against some of the assumptions that are built into Q1 economic views. Most observers expect businesses to build up inventories and undoubtedly there is some of that going on but her comment reveals that we’re still in a just-in-time economy where turns dominate rather than flexibility.

Looking ahead, CFO John Dietrich said there is no help coming.

“I think it’s reasonable to assume that the macro environment is not going to significantly improve at least for the first half of FY ’26…” With their odd fiscal year that would basically mean softness through calendar 2025.

The company now projects FY ’25 adjusted earnings per share to be in the range of $18 to $18.60 compared to our $19 to $20 prior range.

Finally, the indications from Carere are that companies will pass on tariff costs.

“As far as kind of how customers are planning, we’re having a lot of conversations about being able to move the network as they require… I would say, to the point on inflation, that we are talking to a lot of customers who are anticipating that they will increase prices or already have.”

In short, there are some real problems in the economy.

This article was written by Adam Button at www.forexlive.com.Shares of FedEx are down 9.2% and traded today at the lowest since May 2023. That comes on a lower earnings guide and concerns about the macro economy. There were some revealing details in the conference call.CEO Raj Subramaniam noted some of thing things that have been weighing on the economy.”Weakness in the industrial economy continued to pressure our higher-margin B2B volumes,” he said. “The current environment, however, is adding uncertainty to demand.” Perhaps most-interesting was a comment from Brie Carere, FedEx’s Chief Customer Officer who said this:”From an outlook perspective, we think that we have given you a very prudent forecast for the fourth quarter and that this incorporates the feedback that we’ve had from our customers around the world. I would say that from a feedback perspective, I think first, the #1 thing that we keep getting asked is has there been a pull forward. We did not see any significant pull forward in Q3 [their FY ends May 31]. We did see a little volatility in APAC kind of at the end of February, early March. But for the most part, a pull forward is really hard, so we have not seen that, actually. In all the sales calls that I’ve done over the last 90 days, I’ve actually only met one customer who attempted it and they regretted it because they ended up storing some excess inventory.”That goes against some of the assumptions that are built into Q1 economic views. Most observers expect businesses to build up inventories and undoubtedly there is some of that going on but her comment reveals that we’re still in a just-in-time economy where turns dominate rather than flexibility.Looking ahead, CFO John Dietrich said there is no help coming.”I think it’s reasonable to assume that the macro environment is not going to significantly improve at least for the first half of FY ’26…” With their odd fiscal year that would basically mean softness through calendar 2025.The company now projects FY ’25 adjusted earnings per share to be in the range of $18 to $18.60 compared to our $19 to $20 prior range.Finally, the indications from Carere are that companies will pass on tariff costs.”As far as kind of how customers are planning, we’re having a lot of conversations about being able to move the network as they require… I would say, to the point on inflation, that we are talking to a lot of customers who are anticipating that they will increase prices or already have.”In short, there are some real problems in the economy.
This article was written by Adam Button at www.forexlive.com.  Read MoreNews 

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