E-commerce demand has slowed. FedEx’s results will show us where it stands now

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When package-deliverer FedEx Corp. reports its third-quarter earnings on Thursday, the results won’t just be about shipping conditions. They’ll be about all the people and businesses that still want it, after e-commerce demand waned last year and FedEx FDX,
Started a search myself to reduce the cost of billions.

The company will report with multiple retailers and software names – such as Adobe Inc. and Gitlab Inc. – SVB Financial Group as the collapse of SIVB,
Raises further questions about the future shape of the technology sector landscape.

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FedEx has said a “weak demand environment” and an “e-commerce reset” have weighed on sales in recent months. Still, the company raised shipping prices this year, and is still raking out more money from each delivery — helped by additional fees that offset fuel costs — even as shipping volumes fade. As part of an effort to save money, FedEx has grounded jets and cut flights and ground-service routes, and has said it will close some locations that offer copy and printing services. Are.

As FedEx tries to cut expenses, investors, once focused on profit, have arrived. Shares have rallied since September.

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But analysts will focus on the concrete details. TD Cowen analyst Helen Baker said in a research note Friday that she will focus on signs of progress around FedEx’s cost-cutting drive. She said she would also look for updates on volumes, pricing and e-commerce demand.

“As the economy has reopened, we have seen a decline in online orders,” she said. “We are wondering if there has been a change in attitude.”

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Other analysts said they would watch for any details on FedEx’s efforts to cut costs.

“Part of our creative outlook on FedEx is a catalytic path through and beyond earnings,” Citi analyst Christian Weatherby said in a research note this week.

“While we think meeting/beating estimates is key to the story to build credibility, we also see a detailed walk through of the next $4b of cost reductions and potentially more as a positive catalyst Some preview/bridge forward of Network 2.0—period.”

Wolfe Research analysts said FedEx has room to cut more deeply.

He added, “Parcel pricing remains solid, we see market share opportunities for FDX this year, and with much more to fix, the company’s cost reductions look increasingly structural to us with even more potential.” ” “So, the FDX feels like a unique story in transportation right now, with trough EPS already behind us, and significant EPS upside potential in the F25.”

Some analysts were more cautious on the broad freight industry. After an e-commerce boom from COVID-19 quarantines in 2020 and 2021, both the shipping and software industries have seen demand slump over the past year, increased demand for travel and entertainment, and price hikes for basic items happened. As unwanted clothing, appliances and electronics pile up in retailers’ stockrooms, store chains — after cutting prices to sell that surplus — are staying cautious to keep investors happy.

“Retailers unlikely to shift from de-stocking to re-stocking near-term aren’t a ‘two halves story’ like transportation,” Bascom Majors, a Susquehanna financial analyst who covers logistics and trucking, said in a note. ” month. “We remain cautious of inventory volumes and pricing in 2Q.”

Earnings this week

Elsewhere during the week, BuzzFeed Inc. bzfd,
The report on Monday followed layoffs there and elsewhere in the media industry. Meal-kit provider Blue Apron Holdings APRN,
Report on Thursday, as it weighs a “potential business combination” following the return of restaurants following the COVID-19 lockdown and a major drop in its stock price. Grill maker Treasure Inc. cook,
reports Thursday, as retailers reconsider which products — including grills — they bring into stores.

call to put on your calendar

Software Income: Media-Software Designer Adobe ADBE,
Software-development platform Gitlab GTLB reported earnings on Wednesday.
First report in the week, on Monday. Adobe reports regulatory hurdles for $20 billion acquisition of design platform Figma. Gitlab, like other tech firms, recently announced plans to lay off employees. The results from both companies may give some sense of how far more tech companies have to scale back, and where they might find a bottom, as the industry wrestles with a pandemic-era surge in demand.

numbers to watch

Parsing the Benefits and Drawbacks to Discount Retail: Dollar General Corp DG,
Reported fourth quarter results on Thursday. The results will come after “lower-than-anticipated sales and higher-than-anticipated inventory damage” due in part to Winter Storm Elliott issued a warning on its profitability. Discount chains, one argument goes, tend to do better when prices rise and the economy shows signs of faltering, because more shoppers are looking for bargains on things like groceries. However, the rising prices have hit low-income customers more. Still, shares of rival Dollar Tree Inc. got a lift this month after its own results.

Meanwhile, teen-focused Five Below Inc. five,
Report on Wednesday. The chain, which sells items like toys and electronics — typically priced below $5, though not all of them — will report after more shoppers are turned away from both of those. Wall Street, however, hasn’t been alarmed. Five Below’s stock is up 22.5% over the past 12 months.

Credit: www.marketwatch.com /

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