Raj Subramanian, the CEO of package delivery giant FedEx (NYSE:FDX), had already warned of an imminent global recession last week. Consequently, today’s traders should have been prepared for FedEx to release less-than-ideal quarterly data today. Nevertheless, FDX stock slipped 2% to 3% this morning as investors absorbed the company’s first-quarter fiscal 2023 results.
If anyone might have an idea of where the economy is heading, it would be Subramanian. After all, he’s the head of a global logistics company. If he sees supply chain problems and fewer packages being delivered, then Subramanian might have been right to predict that a recession is coming.
In case that forecast didn’t already put FedEx’s investors in a sour mood, the company further bolstered the bearish thesis by releasing its preliminary quarterly data last week. The management’s commentary told a dark tale:
First quarter results were adversely impacted by global volume softness that accelerated in the final weeks of the quarter. FedEx Express results were particularly impacted by macroeconomic weakness in Asia and service challenges in Europe, leading to a revenue shortfall in this segment of approximately $500 million relative to company forecasts.
With that, FedEx is now expected to earn a generally accepted accounting principles (GAAP) operating income of $1.19 billion ($3.33 per share) for the August quarter on revenue of $23.2 billion.