Amazon.com, Inc. (NASDAQ:AMZN) reported revenue and earnings below expectations for the third quarter and disappointed with its guidance for the final three months of this year.
The online shopping giant's performance took a hit from global supply chain issues and the lifting of Coronavirs (COVID-19) restrictions, which saw shoppers return to physical stores.
Net sales came in at US$110.8bn in the quarter to end-September, up 15% from a year ago, but below the market consensus of US$111.6bn.
Earnings per share fell sharply to US$6.12 from US$12.37 and were well below the US$8.92 forecast by the market.
Operating income decreased to US$4.9bn US$6.2bn.
Meanwhile, net sales from services totalled US$55.9bn in the third quarter, for the first time surpassing net product sales, which amounted to US$54.8bn.
The group expects costs to increase by billions of dollars as a result of the pandemic and other challenges that will continue to have a negative impact in the final three months of the year.
For the fourth quarter, which includes the important Christmas season, the company expects net sales to grow 4%-12% to US$130bn-US$140bn. The guidance disappointed the markets, with analysts having forecast growth of around 13% in net sales to US$142bn in the final three months of 2021.
Amazon estimates that operating income will drop to US$0-US$3bn from US$6.9bn.
"In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season," said Amazon chief executive Andy Jassy. "It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”
Chief financial officer Brian Olsavsky told reporters on a conference call Amazon expects US$4bn in additional costs related to labour and inflation, as well as productivity issues in its warehouses.
The group has introduced a number of measures to deal with the shortage of staff, including bonuses and payment of college fees for employees.
Shares were 4.83% lower at US3,280 in pre-market trade.