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FedEx

stock was tumbling after the company doubly disappointed investors Thursday announcing weak quarterly results earlier than expected while withdrawing its full-year financial guidance.

The stock was down more the 12% in after-hours trading after

FedEx

(ticker: FDX) said it earned $3.44 a share from $23.2 billion in sales in its fiscal 2023 first quarter which ended in August. Wall Street was looking for $5.10 in per-share earnings from $23.5 billion in sales.

Sales were close, but management said revenue was impacted by “global volume softness.” The economy is slowing. Costs are also a problem. The company is going to close more than 90 FedEx office locations, slow hiring, and consolidate some package sorting operations, among other actions, to save some money.

All that led to FedEx withdrawing its guidance for the full year. Back in June, the company said it expected to earn between $22.50 and $24.50 a share.

“Results were significantly worse than we feared,” wrote Citi analyst Christian Wetherbee in a Thursday report. He expected some struggle for the company too. Wetherbee downgraded shares to Hold from Buy on Sept. 6. FedEx’s Express package delivery business missed his estimates and FedEx’s Ground business, which provides lower cost, day-certain package delivery, was also weak. FedEx’s freight business was better than Wetherbee expected.

“While this performance is disappointing, we are aggressively accelerating cost reduction efforts and evaluating additional measures to enhance productivity, reduce variable costs, and implement structural cost-reduction initiatives,” said CEO Raj Subramaniam in a news release. “These efforts are aligned with the strategy we outlined in June, and I remain confident in achieving our fiscal year 2025 financial targets.”

FedEx wants to increase operating profit by $3 billion to $4.5 billion compared with fiscal year 2022, when it earned about $6.9 billion.

Investors aren’t thinking about the long term now. Shares are falling and through Thursday trading, FedEx stock was off about 21% year to date. The

S&P 500
and

Dow Jones Industrial Average
are down about 18% and 15%, respectively.

United Parcel Service

(UPS) UPS stock has held up a little better dropping about 14% so far in 2022. But shares are dropping, down more than 5%, after the disappointing from FedEx.

UPS declined to comment about current business trends. The company expects to generate about $102 billion in sales in 2022. That implies about $53 billion in second-half 2022 sales, up about 4% compared with the second half of 2021. Sales grew by about 6% year over year during the first half of 2022.

Wetherbee, for his part, doesn’t think UPS will be as affected by the current environment as UPS adding that UPS reiterated its guidance this month.

Investors might still send UPS stock lower too. FedEx and UPS won’t be the only stocks caught up in the fallout. Other logistics providers will be hit. Investors can see where it spreads from there.

Write to Al Root at [email protected]