The eCommerce giant has released its third quarter figures.
(Photo: Reuters)
Seattle Amazon has disappointed investors: delivery bottlenecks, a lack of workers and massive investments will ruin Amazon’s results in the third quarter of 2021. The online retailer is also giving a disappointing outlook for the upcoming Christmas season: the Seattle-based group is only expecting one in the current fourth quarter Revenue between $ 130 and $ 140 billion and profit between $ 0 and $ 3 billion – significantly less than investors had hoped. The share price slipped after the hours of trading by more than four percent.
The result not only shows how badly Amazon is also suffering from global problems in supply chains. It also shows once again how much the AWS cloud business has become the Group’s actual cash cow. In the classic online trade, however, Amazon even posted a loss in the third quarter.
Andy Jassy, who succeeded Jeff Bezos as CEO in July, justified the weak result primarily with the high investments in logistics. “We have always said that if we have a choice between optimizing for short-term profit and what is best for our customers over the long term, then we will choose the latter,” said Jassy.
For the fourth quarter, he expects “billions of dollars in additional costs to our consumer business as we manage labor shortages, higher labor costs, global supply bottlenecks and higher freight costs.” That will be expensive in the short term, “but it is the right prioritization for our customers and partners”.
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Amazon wants to hire 275,000 new employees
Because of the problems with the supply chains, Amazon has recently opened additional logistics centers and further expanded its fleet of trucks and planes. The online retailer recently announced that it plans to hire another 275,000 employees for the holiday season. This is not easy in the US at the moment, given the labor shortage. Amazon has therefore already increased its wages, promises a $ 3,000 bonus for every new employee and partially covers the costs of a university education.
In the third quarter, Amazon was able to increase its sales across all business areas by a total of eleven percent to $ 11 billion. But the net profit of $ 3.1 billion was only half as high as in the third quarter of last year and well below the expectations of analysts. In its classic online trading business Amazon, Amazon even posted an operating loss of $ 31 million in the third quarter. This was mainly due to the international business, which lost 911 million.
The AWS division, which Jassy was responsible for before his rise to CEO, was able to increase its sales in the third quarter by almost half and the operating profit by a third. At $ 16 billion, the cloud business accounts for less than 15 percent of total revenue of $ 111 billion, but it generated the largest operating profit at $ 4.8 billion.
For the first time in many years, Amazon even considers a zero possible with its profit forecast for the fourth quarter. The zero to three billion dollars that the board is now reckoning with is well below the $ 6.9 billion in profit that Amazon wrote a year ago.
“Amazon’s profits fell below the worst-case scenario for most of them this quarter,” commented trade expert Andy Halliwell from the Publicis Sapient consultancy. As expected, Amazon has also ignored allegations of mistreatment of employees in warehouses and recent ‘brushing’ fraud allegations in the UK. In the New York neighborhood of Staten Island, workers are currently trying to unionize.
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