FedEx Falls as Rising Costs Cool Wall Street’s High Hopes
- Ground unit margins drop to 7.5% from 11.8% in prior quarter
- Courier’s sales, per-share earnings outpace analyst estimates
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FedEx Corp. failed to keep up with Wall Street’s soaring expectations as a jump in costs at the Ground unit crimped profit margins and spurred doubts about the extent of a bonanza from record package deliveries.
The Ground unit, which carries most of the company’s U.S. e-commerce business, had margins of 7.5% in the fiscal second quarter, down from 11.8% in the previous quarter, FedEx said Thursday. The division’s higher spending on wages and purchased transportation dragged down FedEx’s overall margins from the previous three-month period, even as profit surged from last year.