FedEx stock falls on weak profit forecast amid tariff concerns

FedEx Corporation has recently experienced a significant decline in its stock price, falling over 5% following the announcement of a weak profit forecast for the upcoming quarter. The company projected adjusted earnings between $3.40 and $4 per share, which fell short of analysts’ expectations of $4.06 per share . This disappointing outlook underscores ongoing concerns regarding U.S. trade policies and regional tensions, particularly the cessation of duty-free treatment for specific Chinese shipments that affect various companies .

FedEx adjusted its operations in response to changing trade policies by using its Tricolor network optimization initiative that is designed to enable it to respond to changes in the market, Subramaniam said.

For example, in response to shifts in trade flow, the company reduced capacity on its Asia-to-Americas lane by more than 35% in the first week of May compared to April, continued to adjust capacity during the month, and exited May with capacity reduced by 20%, Subramaniam said.

“Our Tricolor strategy enables us to adapt our own network faster than ever before as circumstances and the needs of our customers change, driving greater efficiency and a better customer experience,” Subramaniam said.

FedEx declined to issue full-year earnings and revenue forecasts, citing uncertainty over U.S. trade policies, particularly with regard to China - the world's largest exporter.

FedEx is more exposed to China trade than rival UPS, whose shares were down less than 1%. Washington slapped 145% tariffs on China in April, freezing trade between the superpowers, before lowering them to 30% in May.

FedEx in December announced long-anticipated plans to spin out its Freight division, leaving two publicly traded companies. At that time, FedEx said it expected the tax-free spin-off would be executed within 18 months.

The quarterly results come just days after FedEx’s founder and executive chairman, Fred Smith, died at the age of 80. Smith stepped down as CEO in 2022 and was succeeded by Subramaniam.

The broader economic context reveals an increasing apprehension surrounding tariffs and their potential impact on shipping volumes. Analysts have noted that FedEx's stock has declined by approximately 18.5% year-to-date, primarily due to weaker retail sales and uncertainties related to inbound shipments from China . Furthermore, this marks the third consecutive quarter in which FedEx has reduced its profit outlook, attributing these adjustments to sluggishness in the U.S. industrial economy amid evolving tariff policies .

In response to these challenges, FedEx has suspended its full-year forecast for fiscal 2026 altogether. The decision reflects heightened uncertainty about future shipping demand as tariffs may lead consumers to curtail spending . As global trade dynamics continue to shift due to geopolitical tensions and tariff implementations, FedEx's performance will likely remain under scrutiny as stakeholders assess its ability to navigate these turbulent waters.

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Sara H

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