Amazon yesterday released its Q3 results, but shook the marketplace by projecting that its Q4 net sales "are expected to be between $140.0 billion and $148.0 billion, or to grow between 2% and 8% compared with fourth quarter 2021 … Operating income is expected to be between $0 and $4.0 billion, compared with $3.5 billion in fourth quarter 2021."
The forecast, the Wall Street Journal writes, is "the latest stark sign of how shifting economic forces are battering tech giants that thrived during the pandemic."
Amazon said that Q3 net sales increased 15% to $127.1 billion in the third quarter, compared with $110.8 billion in third quarter 2021 … North America segment sales increased 20% year-over-year to $78.8 billion … net income decreased to $2.9 billion in the third quarter, compared with $3.2 billion in third quarter 2021."
CEO Andy Jassy released the following statement:
“In the past four months, employees across our consumer businesses have worked relentlessly to put together compelling Prime Member Deal Events with our eighth annual Prime Day and the brand new Prime Early Access Sale in early October. The customer response to both events was quite positive, and it’s clear that particularly during these uncertain economic times, customers appreciate Amazon’s continued focus on value and convenience.
"We’re also encouraged by the steady progress we’re making on lowering costs in our stores fulfillment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward. There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets. What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”
CFO Brian Olsavsky said yesterday that Amazon is "preparing for what could be a slower growth period like most companies. We are going to be very careful on our hiring … We certainly are looking at our cost structure and looking for areas where we can save money.”
The Journal writes that "Amazon has the largest share of online commerce, about 38%, but its market share has plateaued in recent years, according to market research firm Insider Intelligence. Analysts say the company’s size has made it unlikely the e-commerce unit’s growth would hit the same pace it once did. Amazon also is dealing with increased competition from Walmart Inc., Target Corp. and others."
- KC's View:
Interesting the use of the phrase "like most companies" by Olsavsky.
I thought Amazon wasn't like most companies.
It does have some advantages over many retail competitors - AWS, for example, saw double digit growth in the quarter and continues to be a strong supporter of all of Amazon's other businesses. And I do think that the company's approach to business - wanting to be an inextricably intertwined part of people's lives - will serve it well in the long run, especially because it is so well resourced.
But Amazon may find that the retail plateau with which it is dealing may go on for a while. Which means that a great emphasis on food, in which the company still has not figured out what it wants to be when it grows up, probably is inevitable.