By Paul Ziobro and Allison Prang 

FedEx Corp. said Christmas-like levels of online shopping boosted its business, and it is seeing tentative signs that the global economy is recovering from the coronavirus pandemic.

The delivery giant also experienced a jump in international cargo during the fiscal fourth quarter, helping to offset the significant decline in commercial shipments as thousands of businesses closed due to broad lockdowns.

FedEx posted a 3% drop in total revenue to $17.4 billion. Analysts polled by FactSet were expecting revenue of $16.8 billion.

Shares rose more than 8% in after-hours trading.

FedEx has seen a significant surge in deliveries to homes during the pandemic as homebound shoppers buy more online. The company said that 72% of shipments in the U.S. went to residences in the latest quarter, compared with 56% a year ago. Its Ground unit, which is more exposed to e-commerce shipments, posted a 20% increase in revenue during the latest period, with average daily shipping volume up 25% from the same time last year.

Chairman and Chief Executive Fred Smith said that deliveries tied to online shopping were comparable to the level seen during the holidays.

FedEx has been pivoting its business to cater more to online merchants by delivering seven days a week and incorporating new technology to optimize routes. The pandemic has accelerated a shift in shopping habits, including shoppers feeling more comfortable buying things like furniture and pricey electronics online. More older consumers are discovering online shopping too.

"What we expected to happen over a few years happened in a matter of months," operating chief Raj Subramaniam said on Tuesday's earnings call.

Home deliveries tend to have higher costs, as drivers travel farther and make more stops compared with a route filled with more business deliveries where multiple packages are dropped off at a time.

FedEx has taken steps to try to curb the influx of online orders and offset the higher costs. In recent weeks, it set limits on how many orders retailers like Kohl's Corp. could ship out of their stores, which were converted to miniature distribution centers fulfilling online orders. It also recently imposed extra surcharges on certain packages, including for shipping oversize items, following similar added fees by United Parcel Service Inc.

The company's commercial shipping volumes fell significantly during the quarter but business-to-business shipments have picked up in recent weeks after bottoming out in April.

"There are signs of tentative economic recovery under way," Chief Marketing Officer Brie Carere said.

The company also incurred about $125 million in extra costs as it bought protective equipment for workers and other safety supplies.

The company reported a loss of $334 million, or $1.28 a share. FedEx's loss a year ago was $1.97 billion, or $7.56 a share. The latest results included costs related to adjustments to its retirement plan and goodwill impairment charges.

The company said adjusted earnings were $2.53 a share. FactSet said analysts expected $1.58 a share in adjusted earnings for the quarter.

The company said it wasn't giving an outlook for earnings for the new fiscal year "as the timing and pace of an economic recovery are uncertain." It said it planned to reduce its capital spending by about $1 billion from the prior year as it cuts spending on replacement vehicles and delays upgrades to some facilities.

Write to Paul Ziobro at Paul.Ziobro@wsj.com and Allison Prang at allison.prang@wsj.com

 

(END) Dow Jones Newswires

June 30, 2020 19:18 ET (23:18 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.
FedEx (NYSE:FDX)
Historical Stock Chart
From Jun 2020 to Jul 2020 Click Here for more FedEx Charts.
FedEx (NYSE:FDX)
Historical Stock Chart
From Jul 2019 to Jul 2020 Click Here for more FedEx Charts.