Amazon (NASDAQ:AMZN) shares are down 5% in pre-market trading after the e-commerce giant reported weaker-than-expected third-quarter results and lowered its guidance for the upcoming holiday season.
Amazon announced earnings per share (EPS) of $6.12 U.S. versus $8.92 U.S. that was expected, according to analysts surveyed by Refinitiv data. The company’s revenue totaled $110.81 billion U.S. compared to $111.6 billion U.S. that was expected by Wall Street.
Amazon blamed the poor results on decelerating sales growth as consumers go back to physical stores and the company faces global supply chain challenges.
The company’s revenue in the third quarter rose 15% but that was down from 37% growth in the same period a year ago at the height of the pandemic.
For the fourth quarter, Amazon forecast sales between $130 billion U.S. and $140 billion U.S., representing growth between 4% and 12%. Analysts surveyed by FactSet were expecting revenue to rise 13.2% year-over-year to $142.1 billion in this year’s final quarter.
The company also said that it expects to take on "several billion dollars" of extra costs in its consumer business in the fourth quarter as a result of labor shortages, higher employee costs, global supply chain constraints and increased freight and shipping costs.
The company has taken steps to shore up its supply chain amid the global challenges, by adding new shipping ports and boosting its fleet of planes and trucks. Amazon said earlier this month that it plans to hire 275,000 permanent and seasonal employees to help manage the holiday shopping rush.
Amazon said its operating profit in the fourth quarter will be in the range of $0 U.S. and $3 billion U.S. That’s a significant step down from its operating profit of $6.9 billion U.S. a year ago.
For the first time in its history, revenue from Amazon services surpassed its retail sales. Net product sales were $54.9 billion U.S. in the quarter, while revenue from Amazon Web Services (AWS), advertising, third-party seller services and Prime subscriptions added up to $55.9 billion U.S.
AWS topped estimates, with revenue jumping 39% to $16.11 billion U.S., while analysts expected sales of $15.48 billion U.S. AWS generated $4.88 billion U.S. in operating income in the period.
Without the hefty profit from AWS, Amazon would have recorded a loss for the third quarter.
Tech Insider
