Why over 90 locations are closing

FedEx (FDX) said it will close more than 90 stores and at least five corporate office locations as it seeks to increase its costs amid what it called an “ongoing volatile business environment.”

The parcel delivery company is looking to cut costs as it saw its delivery volume shrink in the last quarter and expects the global economy to deteriorate in the future.

FedEx also said it was freezing hiring and cutting flight frequency. The company will also reduce labor hours and reduce Sunday hours at some FedEx Ground locations.

After the FedEx announcement, its share price fell more than 20% in premarket trading on Friday.

In a statement, FedEx president and CEO Raj Subramaniam said: “Global volumes declined as macroeconomic trends deteriorated significantly later in the quarter, both internationally and in the US. We are tackling these headwinds quickly, but given the speed with which the circumstances changed, results are below our expectations.

“While this performance is disappointing, we are aggressively accelerating cost-cutting efforts and evaluating additional measures to increase productivity, reduce variable costs and implement structural cost-saving initiatives.”

The cuts come as FedEx saw its parcel shipments plummet in August when its ground services hit about $300 million. The company aims to reduce its fiscal spending from $6.8 billion to $6.3 billion, it said in its revised forecast.

The company also withdrew its earnings forecast for the year, which it published three months earlier, due to market volatility. Fedex said it is now focusing on “aggressive cost-cutting actions”.

FedEx expects the second quarter to bring in revenue of $23.5 billion to $24 billion. Earnings per diluted share is expected to be $2.65 or more. First quarter revenue came in at $23.2 billion, below Wall Street’s expectations of $23.6 billion, according to the Associated Press.

As of Friday premarket hours, FedEx shares traded at $162.58, down $42.29 or 20.64%.

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