This post was originally published on this site
https://i-invdn-com.investing.com/trkd-images/LYNXMPEJ34073_L.jpg
Executives at the Memphis, Tennessee-based package delivery company last month said they were on track to hit $1 billion in permanent cost cuts this fiscal year ending May 31 – putting FedEx well on its way toward its 2025 goal.
Most of those cost savings have come from FedEx’s Express division that offers next-day delivery and contributes the largest share of company revenue. Among other things, FedEx has parked Express planes, retired older MD-11 aircraft and laid off 10% of officers and directors to reduce costs.
The company, which competes with direct rival United Parcel Service (NYSE:UPS) and Amazon.com (NASDAQ:AMZN)’s growing delivery operation, is racing to reduce overhead that has pressured profits as demand for deliveries cools and global recession threatens.
Even with better-than-expected progress on cost controls during the quarter that ended Feb. 28, Express operating margin for that period fell to 1.2% from 4.6% the year earlier.
“The volume and broader economic outlook remain uncertain, and timing for delivery of the remainder of the company’s cost savings initiatives is still a bit fuzzy,” Stifel analyst Bruce Chan said in a client note last month.
