Amazon’s sales forecast suggests pandemic boom is over

Bloomberg

Amazon.com Inc warned Wall Street that it will have to spend billions of dollars hiring workers, paying them more and even speeding partly empty trucks to their destinations to ensure that supply-chain snarls don’t derail the holiday shopping season.
The massive outlays could wipe out Amazon’s profit during the last three months of the year, executives said. The company also reported third-quarter revenue and earnings that fell short of projections. The shares declined 4% in extended trading.
Revenue will be $130 billion to $140 billion in the period ending in December, the Seattle company said in a statement. Analysts, on average, estimated $141.6 billion, according to data compiled by Bloomberg. Operating income could be as low as zero, Amazon said, a step back for the company after reaping billions of dollars in profit each quarter going back to early 2018.
The results reflected the first period under new Chief Executive Officer Andy Jassy, who took the helm of the world’s largest online retailer from Jeff Bezos in July. Amazon shares have gained 5.8% this year, underperforming the broader market, as consumers who turned to online ordering in record numbers during the pandemic began to resume in-person shopping, eating out and traveling. Amazon had
signalled that slower sales growth — and high spending in areas such as wages and new warehouses — would persist through the end of the year.
“Consumers have started to return to prepandemic spending patterns,” Chief Financial Officer Brian Olsavsky said. Amazon is increasingly dispatching partly empty trucks, sending products on more circuitous routes and speeding some shipments to make sure that customers get their items within the company’s promised windows.
While Amazon sought to reassure shoppers and shareholders that its investments left it well prepared to weather the global supply chain woes, Jassy said the expansion would come at a cost.
“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,” he said. “It’ll be expensive for us in the short term, but it’s the right prioritisation for our customers and partners.”