FedEx posted disappointing Q2 earnings results, but in a call with investors, the company’s CFO said it will not only rebound but surpass Amazon in fiscal year 2021, according to a report by CNBC.
“If you think about all the positive things we’ve said and that we’re seeing, as we get into 2021, we will start lapping Amazon,” FedEx CFO Alan B. Graf Jr. said. “Without giving you specifics, we’re at the bottom, and we’re going to come up off the mat and we’re going to improve through the rest of this year and into the next.”
FedEx has spent a lot of money to expand its services to go seven days a week, and it said it has done “operational synergies” as well.
The company’s earnings slump has lowered its full-year earnings this year, and its shares dropped 9.8 percent in trading early on Wednesday (Dec. 18). Since Tuesday, the company has lost more than 4 billion in market value and the stock is down about 8.9 percent.
The company said “loss of business from a large customer,” which it confirmed was Amazon, as well as rising costs and weak global conditions contributed to the disappointing numbers.
“The loss of volume from Amazon had a larger negative impact to the second quarter than the first quarter since the FedEx ground contract with Amazon expired in August,” Graf said.
In August, FedEx said it was going to end its ground-delivery contract with the online giant, and stopped express shipping with Amazon in June. More recently, Amazon has prevented its third-party sellers from using FedEx, which could potentially cause problems for many of its sellers.
The move has caused many of the sellers to scramble and find a new shipping partner, which could raise costs for them.
FedEx only recently started referring to Amazon as a competitor, after saying the company did not pose a threat to it. Amazon has been slowly working on developing its own delivery and shipping apparatus.