FedEx Posts Record Revenue For Quarter on Surge in Packages -- WSJ
By Paul Ziobro
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 16, 2020).
Christmas came in July for FedEx Corp. The delivery company
posted the highest quarterly revenue in its history as the
coronavirus pandemic spurred residential-shipment levels normally
seen during the holiday season.
FedEx shipped 31% more packages a day through its Ground network
during the summer months. The extra cargo boosted profit more than
60% for the three months ended Aug. 31.
More consumers are buying products such as laptops and toilet
paper online because of temporary store closures and pandemic
restrictions. That has primarily been a boon to the FedEx Ground
business, which handles shipments for chains such as Target Corp.
and Dick's Sporting Goods Inc. Those retailers reported e-commerce
sales more than doubled in their latest quarters.
FedEx expects the trend to stick. It now projects an average of
100 million parcels will be shipped daily in the U.S. across all
carriers sometime in 2023, compared with its previous forecast of
hitting that milestone in 2026.
"The growth we expected to see in three to five years happened
in a matter of three to five months," Raj Subramaniam, the
company's chief operating officer, said on a conference call.
The Express business, which ships packages and cargo by air,
received a boost from the sharp decline in international passenger
flights, which used space in their bellies to ferry shipments
across the globe. With fewer commercial flights, shippers are
paying to use jets flown by FedEx or its rivals. International
volume in the Express business rose 16%.
After struggling to manage the rise in volume early in the
pandemic, FedEx and its main rival, United Parcel Service Inc., are
now turning their focus to the holiday season, which will layer
another cascade of packages onto already strained networks.
"We believe e-commerce will keep volumes elevated and it will be
a record breaking peak," Chief Marketing Officer Brie Carere
The carriers and the U.S. Postal Service are trying to manage
the expected shipping volume with new peak surcharges aimed at some
of the largest shippers.
The higher fees are also meant to offset some of the added costs
of delivering packages and operating during the pandemic. In the
latest quarter, FedEx spent about $100 million on protective
equipment, additional cleaning and other measures to protect its
Delivery companies are also hiring more workers to help with the
expected seasonal surge. FedEx is increasing its annual holiday
hiring goal to 70,000 extra workers, up from around 55,000 in
previous years. UPS, meanwhile, is hiring about 100,000 workers
over the next few months after adding nearly 40,000 earlier this
On Tuesday, executives said FedEx is spending about $200 million
more this year on capital projects to help handle the increase in
business, but they otherwise continued to refrain from providing an
earnings outlook for the fiscal year, which began in June.
"While business demand improved in the first quarter, continued
uncertainties cloud our ability to forecast full-year earnings,"
said FedEx finance chief Alan Graf.
Aside from online shopping, FedEx said that demand from
businesses also continues to improve as economies reopen around the
For the quarter, FedEx reported earnings of $1.25 billion,
compared with $745 million a year earlier. Excluding certain
expenses, the company said earnings per share were $4.87.
Revenue rose 13% to $19.3 billion from a year earlier.
The results topped Wall Street's expectations, and FedEx shares
were up more than 9% in after-hours trading. The stock has more
than doubled from its March lows.
Write to Paul Ziobro at Paul.Ziobro@wsj.com
(END) Dow Jones Newswires
September 16, 2020 02:47 ET (06:47 GMT)
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