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Online income income FedEx hurt by fight with Amazon and shorter holiday season


Online Income

Online income income FedEx hurt by fight with Amazon and shorter holiday season

FedEx shares teetered on Wednesday a day after the shipping giant reported a 40% drop in its profits. The company, a bellwether for the broader U.S. economy, has been hurt by higher costs, a shorter holiday shipping season and its move to cut ties with online shopping giant Amazon. Fred Smith, the company’s CEO, on…

Online income  income FedEx hurt by fight with Amazon and shorter holiday season

Online income income

FedEx shares teetered on Wednesday a day after the shipping giant reported a 40% drop in its profits. The company, a bellwether for the broader U.S. economy, has been hurt by higher costs, a shorter holiday shipping season and its move to cut ties with online shopping giant Amazon.

Fred Smith, the company’s CEO, on Tuesday told Wall Street analysts the company’s fiscal second quarter was an “anomaly” because of the shorter holiday season. Thanksgiving this year was six days later than last year, making it the shortest stretch between Thanksgiving and Christmas since 2013. He also cited the impact of ongoing trade disputes, which he said resulted in lower domestic and global shipments.

FedEx also said it needed more drivers and package handlers to deliver packages faster, increasing costs. It also pushed Cyber Monday, the busy online shopping day, into the company’s fiscal third quarter.

Online income income Mounting competition from Amazon

FedEx’s stock price was down nearly 8% before the start of trade on Wednesday. The company’s shares have declined 2.9% this year.

FedEx has taken a hit from its recently soured relationship with Amazon, which is building its own delivery fleet that could threaten traditional delivery companies.

New report reveals human cost of Amazon delivery

Amazon has leased jets, built package-sorting hubs at airports and launched a program to let its contractor drivers start their own businesses delivering packages in vans. A recent report by Morgan Stanley estimated that Amazon is delivering half of its packages itself.

FedEx severed ties with Amazon earlier this year, saying it wouldn’t make ground or air deliveries for the online shopping giant. Then this week, Amazon temporarily banned its third-party sellers from using FedEx’s ground service to ship to its Prime members, citing concerns about whether the deliveries would show up in time for Christmas.

Online income income Hitting bottom?

FedEx said the loss of volume from Amazon hurt it in the fiscal second quarter more than the previous one because its ground contract with Amazon ended in August.

“The headwinds of the expansion of 6- and 7-day delivery, the loss of Amazon volume and Cyber Week shifting to the third quarter accounted for approximately 60% of the ground margin decline year-over-year,” Alan Graf, chief financial officer at FedEx, said in a conference call on Tuesday.

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FedEx reported net income of $560 million, or $2.13 per share, in the three months ending Nov. 30. That’s down from $935 million, or $3.51 per share, in the same period a year before. Revenue also missed Wall Street forecasts, falling 3% to $17.3 billion.

Despite the earnings shortfall, some analysts expect FedEx to rebound next year, buoyed by the resolution of trade disputes.

“Favorable outcomes for Brexit and the China trade deal are catalysts for upside,” Credit Suisse analysts said in a note to investors. “The bottom line, we think this could be a good stock as we head into 2020.”

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