FedEx tumbles on weak outlook
FedEx delivered sour news to investors, sinking its shares Wednesday and pulling down other U.S. stocks. The package delivery company sharply slashed its profit outlook for next year. It put the blame on tensions brewing from the U.S. trade war with China, weaker international activity, and the loss of its contract with Amazon.com.
The online retailer made up a small portion of its revenue but its loss will deeply dent FedEx's bottom line. FedEx CEO Fred Smith acknowledged for the first time Wednesday that Amazon had now emerged as a shipping competitor. The split with Amazon could help its rival, UPS, handle more holiday packages, but UPS shares fell today in sympathy.
FedEx now sees its adjusted earnings sliding as much as 29% in 2020. That disappointing forecast for this economic bellwether cast a shadow ahead of the all-important holiday shopping season.
As a countermeasure, FedEx will launch a new round of cost cuts that include grounding and retiring dozens of planes.
