FedEx boss warns of a 'worldwide recession' and outlines plans to close stores, freeze hiring, trim hours, and park planes to cut costs
FedEx's CEO said he thought the world was heading into a recession.
The company reported disappointing earnings, blaming reduced package demand and economic conditions.
FedEx plans to cut costs by reducing flights, closing 90 retail stores, and trimming hours.
FedEx's CEO thinks we're barreling toward a global recession.
His comments in a CNBC interview came after the firm reported disappointing first-quarter results and announced a slew of aggressive cost-cutting measures to help it weather the coming storm.
"I think so. But you know, these numbers, they don't portend very well," FedEx CEO Raj Subramaniam said in response to a question about whether the economy was "going into a worldwide recession."
FedEx faced a decline in shipments around the globe "as macroeconomic trends significantly worsened later in the quarter," the company said. It reported earnings of $3.44 a share, significantly below analysts' consensus of $5.14, according to Refinitiv data cited by CNBC.
FedEx shares opened 21.5% lower Friday morning following the earnings release.
To help mitigate the situation, FedEx plans to cut flights and temporarily park some aircraft, trim labor hours, and freeze hiring. It's also set to close 90 retail locations and five corporate offices.
The company is also revising its 2023 financial outlook and said it expected conditions to worsen in its second quarter.
Economists have sparred for months over whether the US is heading into a recession.
The stock market has plummeted this year, the Federal Reserve has raised interest rates in an effort to tame inflation, the US economy has been shrinking, and many large tech companies have announced layoffs. Still, the economy has added jobs, and the National Bureau of Economic Research hasn't yet sounded the recession alarm.
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