A FedEx employee loads up deliveries in San Francisco.
FedEx‘s rocky relationship with Amazon may have contributed to its fiscal second-quarter earnings slump, but the company says it could actually turn a corner and outpace its competitor in fiscal 2021.
“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 on the company’s earnings call late Tuesday. “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 heavily to expand its ground-delivery service to run seven days a week all year. Graf said those investments, along with “operational synergies” in Europe, would start to pay off in the company’s fiscal 2021.
The comments came after FedEx on Tuesday reported weaker-than-expected fiscal second-quarter results and lowered its full-year earnings outlook for 2020. Shares of FedEx slid as much as 8.1% in early trading on Wednesday.
The company blamed weak global economic conditions, rising costs associated with ground-delivery expansion, online holiday sales shifting to the third quarter and the “loss of business from a large customer,” which Graf later confirmed on the call was Amazon.
FedEx in August announced it would end its ground-delivery contract with Amazon, after halting its express U.S. shipping contract with Amazon in June. Earlier this week, Amazon fired back by announcing it would temporarily prevent third-party sellers from using FedEx’s ground and home delivery services for Prime orders, citing poor delivery performance.
The spat between Amazon and FedEx has heated up significantly in the past year. In September, FedEx started mentioning Amazon as a competitor, after denying the company posed a threat. Meanwhile, Amazon has gradually distanced itself from FedEx and UPS by building up its own delivery network.