FedEx shares slide on lower-than-expected earnings By Reuters

©Reuters. A FedEx vehicle is driven in Manhattan, New York City, the United States, on September 3, 2021. REUTERS/Andrew Kelly

(Reuters) – U.S. delivery company FedEx Corp (NYSE:) on Thursday reported lower-than-expected quarterly profit after ongoing labor problems and the Omicron coronavirus outbreak helped erode sales growth amid bank holidays.

FedEx shares fell 0.8% in extended trading.

E-commerce shipments have increased FedEx’s sales United package Service (NYSE:) since the start of the COVID-19 pandemic — but FedEx has been less successful than its rival at turning that business into profit.

FedEx needs to start capitalizing on an extremely strong demand environment and “show investors that they’re starting to use this increased revenue more efficiently — that they’re managing costs better,” said Patrick Donnelly, an analyst at Third Bridge Group.

In January, FedEx warned that Omicron infections were causing staff shortages and delayed deliveries at its aircraft-dependent express operations. The news came after FedEx said staffing shortages in its ground department were hurting profits and delaying shipments.

Meanwhile, UPS’s unionized workforce has been a bright spot in a tight US job market. UPS workers receive better pay and benefits than their non-union counterparts who deliver for FedEx and (NASDAQ:), who struggle to hire and retain drivers and other key workers. Adjusted net income at Memphis-based company FedEx rose nearly 30% to $1.22 billion, or $4.59 per share, in the fiscal third quarter. That missed analysts’ call for earnings of $4.64 per share, according to estimates from Refinitiv I/B/E/S.

Revenue for the quarter ended Feb. 28 rose 9.8% to $23.6 billion.

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Chris Barrese

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