FedEx Sees a Bumpy Road for Economy; Shipper Cuts Forecast For Year, Doesnt' Expect Big Lift From Holidays
FedEx Corp. threw some cold water on hopes that holiday shoppers would give the uncertain economic outlook a boost.</br></br>The Memphis, Tenn., shipping giant -- regarded as an economic gauge because it handles an average of more than six million packages a day across the world -- reduced its profit target for the year because of an economic outlook pinched by the weak U.S. housing market and higher energy prices. The company said that as a result, it would ratchet back on capital spending.</br></br>"We believe U.S. [gross domestic product] will grow less than 3%" for the rest of FedEx's fiscal year, which ends May 30, said FedEx Chief Financial Officer Alan B. Graf Jr. He said the company lowered its profit guidance "almost entirely based on freight market" and economic forecasts.</br></br>The reduced outlook overshadowed FedEx's results for the first quarter ended Aug. 31, which rose 4% from a year earlier. At 4 p.m. in New York Stock Exchange composite trading, shares of FedEx fell $2.88 to $104.63.</br></br>Wall Street had hoped for a lift for sluggish freight-industry volumes from the annual holiday shipping surge. The peak shipping season traditionally begins in late summer and builds into the fall as retailers and other businesses load boats, planes, trains and trucks with products ahead of the holiday shopping crush.