FedEx, the package-delivery giant, experienced a significant drop in its shares on Tuesday, falling 8% in after-hours trading. The company's revenue forecast was lowered as weaker demand took a toll on its sales, leaving investors disappointed.

According to FedEx, they now anticipate a low-single-digit decline in revenue for the fiscal year, as opposed to their previous projection of flat sales year-over-year. This downward revision comes as a surprise, as analysts had expected a revenue drop of less than 1% in the current fiscal year, based on data from LSEG, formerly known as Refinitiv.

This marks the second consecutive quarter where FedEx has adjusted its sales outlook, signaling the challenges they are facing. The company's Express unit, which is its largest, was particularly impacted in the recently ended quarter, with lower demand, increasing surcharges, and customers shifting to more cost-effective alternatives.

When comparing FedEx's performance to Wall Street's expectations, the company fell short in several key areas. The adjusted earnings per share for the quarter were reported at $3.99, missing estimates of $4.18 according to analysts surveyed by LSEG. Additionally, the automotive revenue reached $22.17 billion, slightly below the expected $22.41 billion.

Despite these shortfalls, FedEx managed to achieve a net income of $900 million, or $3.55 per share, for the three-month period ending on November 30th. This demonstrates an increase compared to the $788 million, or $3.07 per share, reported during the same period last year. The company attributed its higher profit to cost-cutting initiatives.

However, revenue declined by 3%, reaching $22.17 billion compared to the previous year. CEO Raj Subramaniam acknowledged the current challenging demand environment but emphasized the progress FedEx has made in its transformation. He highlighted the company's ability to achieve two consecutive quarters of operating income growth and margin expansion in spite of lower revenue.

Investors reacted swiftly to the lower-than-expected forecast, causing FedEx shares to plummet in after-hours trading. The disappointment among shareholders underscores the uncertainty surrounding the company's ability to navigate the changing market dynamics amid an uncertain economic landscape.

As FedEx adjusts its approach to meet evolving consumer demands and optimize its growth potential, the coming quarters will be critical for the company to regain confidence among investors and stakeholders alike.