FedEx: Consumers Shifting Spending From eCommerce to Entertainment and Services

FedEx has seen consumers shift their spending from eCommerce to entertainment and services.

The company said this Tuesday (June 20) while reporting another decline in package volume during the most recent quarter, Bloomberg reported Tuesday.

FedEx saw continued demand weakness during the quarter ending May 31, with lower volumes across its Express, Ground and Freight operations, the company said in a Tuesday earnings release.

Demand remained soft across the market during the quarter, although the rate of volume decline at Ground and Express improved modestly, FedEx said in a presentation released in conjunction with this report.

“The solid close to the fiscal year demonstrates the significant progress Team FedEx has made in advancing our global transformation while adapting to the dynamic demand environment,” FedEx President and CEO Raj Subramaniam said in the earnings release.

FedEx boosted its operating margins for the fourth quarter of its fiscal year 2023 by managing expenses in such ways as reducing flight hours, retiring aircraft, closing facilities, and managing headcount and hours, according to the press release.

Looking ahead, FedEx expects to see flat to low-single-digit-percent year-over-year revenue growth in fiscal 2024 as it continues its cost and efficiency initiatives.

“We’re approaching fiscal 2024 with the same level of intensity, maintaining a continued focus on improving profitability to position the company for success in what remains a challenging demand environment,” FedEx Executive Vice President and Chief Financial Officer Michael C. Lenz said in the release.

In a separate announcement, FedEx said Tuesday in a press release that Lenz will retire effective July 31 and will serve as a senior adviser until Dec. 31 to help with the transition to a successor.

A shift of consumer spending to experiences was noted in March by Mastercard.

The company said in its Mastercard SpendingPulse report that in February consumers spent 42.7% more on lodging, 15.6% more on airlines and 14.2% more on restaurants than they spent a year earlier.

This growth in spending outpaced that of retail sales — including both in-store and online sales — which grew 6.9% during the same month.

These figures represent nominal spending and are not adjusted for inflation, Mastercard said at the time.