FedEx Corp. FDX reported a better-than-expected first quarter for fiscal year 2026, driven by robust U.S. domestic growth and significant cost-cutting. However, the package delivery giant issued a cautious outlook, revealing an anticipated $1 billion headwind for the full year, largely attributed to the U.S. elimination of the de minimis trade exemption, a policy initiated by the Donald Trump administration.
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FedEx To Take $1 Billion Hit From De Minimis Exemption
Despite beating the first quarter estimates, the looming impact of the de minimis policy on international trade casts a shadow.
The exemption previously allowed goods valued under $800 to enter the U.S. duty-free, significantly boosting cross-border e-commerce, particularly from China. Its removal is now directly impacting FedEx’s highly profitable Asia-to-U.S. shipping lanes.
Executive Vice President and CFO John Dietrich elaborated on the challenge, confirming the $1 billion figure is “embedded in lost opportunity in our FEC volume net of cost line,” alongside direct trade-related expenses like customs clearance.
Brie Carere, Executive Vice President and Chief Customer Officer, further clarified, “the vast majority of that $150 million [first quarter impact] was impact from reduction in top line revenue. Specifically, the majority of that is de minimis impacted in coming out of the China lane.”
FDX’s Domestic Package Services Sees Growth
In stark contrast to the international pressures, FedEx’s U.S. domestic package services saw a 5% increase in average daily volume year-over-year.
The company announced major new business wins, including Best Buy naming FedEx as its primary national parcel carrier, and the ongoing onboarding of “profitable” larger, heavier packages from Amazon.com Inc. AMZN, expected to be complete by the third quarter.
See Also: Trump Ends De-Minimis Exemptions To All Countries: How This Will Impact Your Online Shopping
FedEx Q1 Earnings Snapshot
It reported first-quarter revenue of $22.2 billion, beating analyst estimates of $21.67 billion, and adjusted earnings of $3.83 per share, beating estimates of $3.62 per share.
FedEx expects revenue to be up 4% to 6% on a year-over-year basis in fiscal 2026. It expects full-year adjusted earnings of $17.20 to $19 per diluted share, with a midpoint assuming 5% consolidated revenue growth and $1 billion in transformation savings.
Yet, the persistent global trade challenges, driven by the de minimis policy, remain a significant variable. “The underlying business is very strong as we move into ’27 and beyond,” CEO Raj Subramaniam assured, indicating a long-term view beyond the current trade friction.
Price Action
The stock rose 0.32% on Thursday and 5.48% in after-hours. It was down 17.42% year-to-date and 24.60% over the year.
Benzinga’s Edge Stock Rankings indicate that FDX maintains a weaker price trend in the short, medium, and long terms. However, the stock’s value ranking is relatively strong. Additional performance details are available here.
The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Thursday. The SPY was up 0.47% at $662.26, while the QQQ advanced 0.90% to $595.32, according to Benzinga Pro data.
On Friday, the futures of the Dow Jones, S&P 500, and Nasdaq 100 indices were higher.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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