FedEx Downbeat Once Again after Disappointing Earnings

FedEx shares fell after disappointing earnings results as management now expects full-year revenue to fall. The company's cost-cutting plans have helped offset the decline in sales, but the measures are unsustainable in the long term. Shares of FedEx Express (FDX) fell by double digits after the company reported disappointing earnings results. The company's profits have grown steadily but it faces sales pressure. FDX reported a 2.6% year-over-year decline in Q2 revenue to $22.2 billion, compared with the consensus estimate of $22.4 billion.

Adjusted operating income for the quarter was $1.42 billion, compared with consensus estimates of $1.49 billion and $1.21 billion in the year-ago quarter. FDX reported an operating margin of 6.4%, up from 5.3% a year ago. The increase in operating margin was primarily driven by the implementation of the company's DRIVE program and continued focus on service and revenue quality. FedEx Ground operating income increased primarily due to higher revenue, lower costs and higher sales volume.