Amazon projects best-estimate sales on holiday strength

23 Inc. has forecasted a sharp increase in sales in the current quarter, beating analyst estimates, indicating that the retailer expects the surge in online shopping during the pandemic to continue into the consumer season. vacation.The company also warned that adjustments to its operations and increased spending due to COVID-19 will continue to weigh on its bottom line. Amazon’s operating profit forecast was lower than analysts’ estimates, knocking stocks down about 1.5% under extended trading.

Revenues will be US $ 112 billion to US $ 121 billion in the period ending December, Amazon said in a statement Thursday. Analysts have estimated an average of US $ 112.5 billion, according to data compiled by Bloomberg. Researcher EMarketer Inc. predicted that e-commerce sales in the United States would increase 36% to a record high of US $ 190 billion during the holiday season.

Amazon flourished during the pandemic as people avoided stores and shopped online, stocking up on products ranging from electronics to groceries. The company posted record sales and profits in the second quarter, comforting investors even as Amazon has spent lavishly on new warehouses to meet growing demand and incurred higher costs to hire hundreds of thousands of workers. and ensure the safety of these employees.

Andrew Lipsman, senior analyst at EMarketer, said he suspects Amazon is being cautious with his advice, even optimistic sales forecasts. The company’s projections and rising COVID-19 infection rates in the United States that could depress in-store purchases create an expectation for a booming holiday quarter for Amazon and online retail in general, a he declared.

“We don’t see e-commerce growth rates going down,” Lipsman added.

Amazon said fourth-quarter operating profit would be between $ 1 billion and $ 4.5 billion, compared to an average analyst estimate of $ 5.95 billion. CFO Brian Olsavsky said the discounts offered on the Prime Day sale – which Amazon moved in October from its usual spot in July – would also hurt profitability in the current quarter.

Investors have traditionally focused on Amazon’s costs, fearing that the company’s expenses could reduce its profits. Shares fell to an extended-trading low of US 3,141.30 after closing at US 3,211.01 in New York City. The stock has gained 71 percent this year.

Amazon said it expected to absorb some $ 4 billion in COVID-19-related costs in the quarter, up from $ 2.5 billion in the third quarter. Transportation costs jumped 57% to US $ 15.1 billion in the period ended September 30, a larger increase than the 37% gain in revenue.

Olsavsky said Amazon’s assessment of COVID costs goes beyond providing personal protective equipment and employee testing, and includes items such as lost productivity due to adjusted break times and social distancing in warehouses.

Amazon also reported crossing the one million employee mark, with 1,125,300 full-time and part-time workers at the end of the quarter, up 50% from last year.

The world’s largest online retailer reported third-quarter revenue of $ 96.1 billion, up from nearly $ 70 billion a year earlier. Net income was US 12.37 per share. Analysts have projected US7.55 per share on sales of US $ 92.7 billion.

Analysts widely expect the holiday shopping rush to test the ability of the US logistics system to cope with a home delivery surge. Olsavsky said Amazon is not “totally isolated” from these trends, but the company has spent a lot this year on its own capacity, opening collection and sorting facilities closer to major cities. “It’s up to buyers to shop early,” he says. “We have invested a lot to be ready.”

Sales of Amazon Web Services, the cloud computing unit that in recent years accounted for the bulk of Amazon’s operating profit, increased 29% to $ 11.6 billion.


Please enter your comment!
Please enter your name here