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FedEx reported lackluster financials for the second quarter of its fiscal year and cut profit expectations going forward, continuing the shipping giant’s struggles amid a battle with Amazon.

FedEx is locked in a logistics feud with Amazon after it decided not to renew a ground shipping deal earlier this year. The loss of shipping volume from Amazon packages, combined with a shorter holiday shopping season this year dragged down the company’s earnings, FedEx CFO Alan Graf said on a call with analysts.

FedEx saw revenue slip 3 percent year-over-year to $17.3 billion for the second quarter of its 2020 fiscal year. Earnings per share of $2.13 came in short of analyst expectations.

Graf called the company’s decline in operating profits year-over-year “horrific.” As a result, the company is further restricting hiring, reducing the size of its airplane fleet and pursuing tech investments that could increase efficiency and productivity.

Deutsche Bank AG analyst Amit Mehrotra called FedEx’s earnings results “breathtakingly bad.” FedEx stock is down about 7 percent in pre-market trading Wednesday.

Earlier this week, Amazon blocked its third-party sellers from using FedEx Ground and Home services, due to poor performance during the holiday season. FedEx told the Wall Street Journal that the decision only impacts a small number of shippers but is still limiting during one of the busiest shipping periods.

Graf acknowledged FedEx’s struggles on the call with investors and predicted that the company will turn it around soon.

“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,” Graf said.

E-commerce represents FedEx’s fastest growing business, however it is more costly to run than its bread-and-butter commercial business. FedEx is in the midst of expanding to seven-day delivery, building out an “intra-Europe” parcel business, modernizing its cargo jet fleet and retiring some planes to save money.

These changes, along with the rapidly growing volume of e-commerce packages will help the company rebound, executives said. Without giving specifics, Graf predicted FedEx will “start lapping” Amazon, in the second half of next year.

“We will have a lot more of the sixth and seventh day on our belt and we’re going to be delivering millions of packages on Sunday for the rest of this fiscal year rolling into 2021,” Graf said. “We will finally start getting turning the corner in Europe, with the operational synergies that we will start seeing and those will grow during the year.”

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