Amazon earnings miss expectations due to labor shortages, supply issues

• Amazon forecasts lower sales for the fourth quarter

• Amazon services’ revenue surpassed company’s retail sales for the first time ever

Amazon reported poor quarterly results on Thursday as the e-commerce company faces challenges due to labor shortages and supply chain constraints.

Shares of the company fell more than 4% in extended trading.

Revenue in the third quarter rose 15% at $110.81 billion, down from 37% in the same period last year. Amazon’s revenue also missed analysts’ expectations of $111.6 billion, according to Refinitv.

Amazon CEO Andy Jassy said the company, in the fourth quarter, plans to bear extra costs in its consumer business due to labor shortages, higher employee costs, global supply chain constraints and increased freight and shipping costs.

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“It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners,” said Jassy.

Fourth-quarter forecast

Amazon forecast sales between $130 billion and $140 billion for the fourth quarter, which would be growth between 4% and 12%.

According to FactSet, analysts were expecting growth of 13.2% year-over-year to $142.1 billion.

The company also said its operating profit in the next quarter would be between $0 and $3 billion, down from $6.9 billion in the year-ago period.

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Earlier this month, Amazon said it plans to hire 275,000 permanent and seasonal employees in the U.S. for the holiday shopping rush.

Amazon services sales vs retail sales

Amazon services revenue surpassed company’s retail sales for the first time ever. Net product sales of Amazon in the quarter were $54.9 billion, compared to revenue of $55.9 billion from Amazon Web Services, advertising, third-party seller services and Prime subscriptions.

Amazon Web Services revenue jumped 39% to $16.11 billion, beating analysts’ expectations of $15.48 billion. Operation income from AWS came at $4.88 billion, compared to the $880 million operating profit at the parent company.

Earnings per share of the company were $6.12, compared to analysts’ expectations of $8.92, according to Refinitiv.

Picture Credits: Reuters