FedEx (FDX) said it will close over 90 branches and at least five office locations to prop up its costs in what it says is an “ongoing volatile operating environment.”
The parcel delivery company is looking to cut costs as its delivery volume shrank last quarter and expects the global economy to deteriorate going forward.
FedEx also said it was freezing the hiring and reducing its flight frequency. The company will also reduce staff hours and Sunday hours at some FedEx Ground locations.
Shares fell more than 20% in premarket trading on Friday following FedEx’s announcement.
In a statement, Raj Subramaniam, President and CEO of FedEx, said: “Global volumes declined as macroeconomic trends deteriorated significantly later in the quarter, both internationally and in the US. Results are below our expectations.
“While this performance is disappointing, we are aggressively accelerating our cost reduction efforts and are evaluating additional measures to increase productivity, reduce variable costs and implement structural cost reduction initiatives.”
The cuts come as FedEx saw its package deliveries fall in August as its ground services suffered around $300 million in damage. The company intends to cut its budget spending to $6.3 billion from $6.8 billion, its revised guidance said.
The company also withdrew its earnings guidance for the year it released three months earlier, saying it was due to market volatility. Fedex said it was now focusing on “aggressive cost-cutting measures.”
FedEx expects revenue of $23.5 billion to $24 billion for the second quarter. Earnings per diluted share are expected to be $2.65 or more. According to the Associated Press, revenue for the first quarter was $23.2 billion, below Wall Street’s expectations of $23.6 billion.
On Friday premarket shares of FedEx were trading at $162.58, down $42.29, or 20.64%.
https://www.ibtimes.com.au/fedex-store-closings-2022-why-over-90-locations-will-be-shuttered-1838443?utm_source=Public&utm_medium=Feed&utm_campaign=Distribution Why over 90 locations are closing