FedEx Earnings: Ground Margins Progressing but Express Profitability Stubbornly Low

FedEx's fiscal second-quarter (ended November) top line fell 3% year over year, driven by ongoing package volume and yield declines at express, as well as the soft underlying demand backdrop for freight's less-than-truckload, or LTL, operations. Express' sluggish volume showing stems from muted retailer restocking, soft industrial end markets globally, and lost business from the United States Postal Service, which recently tweaked its delivery strategy. Also, express yields saw pressure from normalizing demand surcharges and mix. Overall, revenue came in slightly shy of our expectations.