FedEx Corporation, a leader in parcel delivery services, has recently reported its fiscal first-quarter results, which have shown an unexpected decline when compared to the same period last year. As per the latest figures, the company experienced a notable drop in adjusted per-share earnings, which fell to $3.60 for the quarter ending August 31, down from $4.55 reported a year ago.
Market analysts had anticipated an improvement, predicting the earnings would rise to around $4.77. Additionally, the company's revenue showed a slight decrease, dipping to $21.6 billion from the previous $21.7 billion, while Wall Street had a more optimistic forecast of $21.91 billion. In reaction to these disappointing results, FedEx's stock took a significant hit, with shares declining nearly 9% during after-hours trading.
The company attributed this downturn in performance to several factors. In their official statement, FedEx highlighted that the results for the first quarter were adversely impacted by a shift in service demand. This included a reduction in priority services and a rise in demand for deferred services, which together constrained yield growth.
Furthermore, they noted that higher operating expenses, coupled with one less operating day in the quarter, negatively influenced the overall results. Digging deeper into Federal Express, the company reported a decrease in operating results due to a decline in domestic priority package volume within the United States.
Issues such as increased wage costs and soaring transportation rates have also played a critical role. It is noteworthy that on June 1, FedEx absorbed ground and services operations, which contributed to the challenges faced during this quarter. In terms of freight operations, which are managed by a separate subsidiary offering less-than-truckload transportation services, a decrease in operating results was also observed.
This decline was attributed to several factors, including a reduction in shipment weight and fewer priority shipments. In light of these challenges, FedEx announced in June that it is actively reviewing its freight operations, expecting to complete this comprehensive review by the end of the calendar year. Looking ahead to fiscal 2025, FedEx has revised its outlook, projecting a non-GAAP EPS ranging from $17.90 to $18.90 before certain adjustments related to retirement plans.
This marks a decrease from the previous forecast of between $18.25 and $20.25. Moreover, after accounting for business optimization costs, the outlook was narrowed to between $20 and $21, bringing the upper limit down from the former range of $22. It is worth mentioning that analysts surveyed by Capital IQ estimate that the normalized EPS for FedEx will land around $20.93. Additionally, FedEx expects to see a modest revenue growth in fiscal 2025, anticipated to be in the low-single digits year-over-year.
This figure also reflects a downward adjustment from earlier expectations, which had suggested a low- to mid-single-digit increase in revenue. Current stock price stands at $273.89, with a change of -26.50, marking a percent change of -8.82..