Amazon Won't Annihilate Retail: FedEx CEO

Smith responded to analysts' questions regarding how Amazon's $13.7 billion deal for grocer Whole Foods would impact the courier business.

Author:: Giovanni Bruno
Publish date:: Sep 20, 2017 1:10 PM EDT

"E-commerce is not going to eliminate the retailing sector of the country," FedEx (FDX) - Get Report CEO Fred Smith emphatically said on the company's first-quarter earnings conference call on Tuesday.

"It's about 10% now. It's certainly going to grow as a percentage. But will it be half? I doubt it," Smith added.

Smith was responding to analysts' questions regarding how Amazon.com's (AMZN) - Get Report $13.7 billion deal for Whole Foods would impact the courier business.

"I think you're going to see e-tailers become more brick-and-mortar," Smith added. "And I think you're going to see brick-and-mortar become more e-tailers. And how that all shakes out, I don't know."

Smith contended that Amazon's move to buy Whole Foods does not demonstrate the e-commerce giant's will to displace the courier business, rather it just illustrated its desire to get more into grocery.

"Groceries are heavy, hard to handle, people like to come and see the produce and so forth," he said.

FedEx's stock fell after it reported adjusted earnings of $2.51 per share on $15.30 billion in revenue for its first-quarter. Wall Street was expecting adjusted earnings of $3.09 per share, on revenue of $15.35 billion.

The company also lowered its full-year 2018 earnings expectations to between $11.05 and $11.85 per share, down from between $12 and $12.80 per share.

Shares of FedEx were rebounding on Wednesday, higher by about 2.5% in midday trading.

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