Friday 29 October 2021
Costs grow
Amazon disappoints with a slump in profits
Amazon earned less than half as much in the third quarter as in the same period last year. The outlook is also rather bleak. Wage increases and higher freight costs are likely to make profits in the Christmas business much leaner than usual.
Delivery problems and a lack of manpower are a burden on Amazon’s businesses. Because of increasing costs, in the worst case scenario you will end up at breakeven in the fourth quarter, in the best case there would be an operating profit of three billion dollars, the world’s largest online retailer announced on Thursday after the US market closed. That is well below the $ 6.9 billion from the same period last year.
In light of the labor shortage, Amazon has raised wages and bonuses to keep the fulfillment centers running. In addition, there are delivery problems worldwide, which the US group is countering with new containers, more partners and high investments. Andy Jassy, the successor to company founder Jeff Bezos at the helm of Amazon, has decided to deliver all Christmas gifts on time. As a result, 133,000 employees were hired in the third quarter alone. Amazon now employs almost 1.5 million people.
The group is doing everything possible to minimize the impact on customers, said Jassy. Although this is initially expensive, it will pay off in the long term. In the current fourth quarter, Amazon expects revenues between 130 and 140 billion dollars. The industry leader from Seattle fell short of the expectations of analysts for the most important quarter for retailers because of Christmas and Thanksgiving.
The Amazon share fell after the hours of trading by four percent, especially since the group also lagged slightly behind analyst forecasts for the third quarter. From July to September, sales climbed by 15 percent to just under $ 111 billion, thanks largely to the flourishing business of the AWS cloud division. However, that was the smallest increase since the beginning of the Corona crisis. Profits were cut in half to nearly $ 3.2 billion.