Amazon (AMZN) released its third-quarter 2021 results on Oct. 28. The global e-commerce company reported a decline in sales growth, as well as fourth-quarter sales guidance that came in below market expectations. Pre-market today, AMZN stock was down 4.50%.
Supply Chain Problems
Supply chain problems, along with labor issues shortages, and inflations caused the company to underperform during Q3. These issues tacked on around $2 billion to the company's expenses last quarter. Amazon has been trying to improve its supply-chain logistical challenges by adding more planes, trucks, and shipping ports.
Holiday Season Woes
“In the fourth quarter, we expect to incur several billion dollars of additional costs in our Consumer business as we manage through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs—all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season,” Amazon CEO Andy Jassy remarked. “It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”
Outlook/Fourth-Quarter Guidance
Amazon expects a less-than-stellar fourth quarter. The company predicts sales of between $130 billion to $140 billion, which is 4% to 12% growth, falling below market predictions. “Operating income is expected to be between $0 and $3.0 billion, compared with $6.9 billion in the fourth quarter 2020.”
