With more vaccinated shoppers venturing out, the Internet giant forecast sales and profits for this quarter that were lower than consensus forecasts Inc emerged as the essential store for homebound shoppers during the COVID-19 pandemic, propelling its sales and profits to new highs. Now, the rush online is slowing down, as vaccinated consumers peel away from computers and smartphones and revert to old habits like traveling and dining out.

The world’s biggest e-commerce retailer on Thursday reported sales and gave a forecast that fell short of expectations. Shares declined about 7 percent in extended trading after the results were released. It marked the first time Amazon had missed quarterly sales estimates since 2018.

The Seattle-based company invested billions to operate through the pandemic while minimizing the spread of COVID-19 through its facilities and hiring hundreds of thousands of workers to meet crushing demand.

Photo: Reuters

New CEO Andy Jassy, who took the helm from founder Jeff Bezos on July 5, has to convince investors that Amazon continues to be a good long-term bet even though revenue growth is slowing and the company faces heightened scrutiny from regulators in the US and Europe, its biggest markets.

”They just don’t have the tailwinds they had last year,” said Brian Yarbrough, an analyst at Edward D. Jones & Co. “It just becomes the law of large numbers. There’s just no way it can be sustained.”

Investors overlooked better-than-predicted profits and a strong performance in the quarter from the company’s advertising business and Amazon Web Services cloud unit. Instead, they focused on slowing growth for the company’s core e-commerce business, which chief financial officer Brian Olsavsky said would continue through the year.

Higher expenses would also linger, as Amazon keeps adding capacity and hiring workers to meet demand that has jumped in the past two years, he said.

Some facilities are handling double the package volume they did just two years ago, he said.

Moreover, Amazon must compete in the labor market for employees as more businesses reopen, which would add to costs.

“I would count on wage pressure for the immediate future,” Olsavsky told analysts on a conference call, discussing factors weighing on Amazon’s profitability.

Second-quarter total operating expenses rose 27 percent to US$105.4 billion, the company in a statement on Thursday.Amazon is working to get more of its employees vaccinated and hopes the Delta variant of SARS-CoV-2 can be controlled even if that means “people are getting out more and doing other things besides shopping,” Olsavsky said.

“It’s a good phenomenon,” he later said.

Revenue would be US$106 billion to US$112 billion in the period ending in September, Amazon said. Operating profit would be US$2.5 billion to US$6 billion.

Analysts, on average, projected US$8.11 billion in profit on sales of US$118.7 billion, according to data compiled by Bloomberg.

Second-quarter revenue rose 27 percent to US$113.1 billion, missing estimates of US$115 billion. Profit was US$15.12 a share in the period ended June 30, compared with the average estimate of US$12.28.

Amazon Web Services revenue jumped 37 percent in the quarter to US$14.8 billion — the biggest year-on-year sales jump in two years.

The company’s “other” revenue category, primarily advertising sales, gained 87 percent to US$7.92 billion. Both units topped analysts’ estimates.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

Source link