Coverage: Amazon.com’s holiday forecast disappoints investors

Amazon.com Inc. on Thursday forecast holiday season sales that disappointed Wall Street, attributing what would be its lowest growth in years more to accounting issues than to any slowdown in business for the world’s largest online retailer.

Jeffrey Dastin and Arjun Panchadar of Reuters had the news:

Amazon’s third-quarter sales and its forecast for fourth-quarter operating profit missed analyst estimates as well. And analysts said international results were disappointing.

For years, Amazon has made expensive bets on new technology and programs, like its $13.7 billion acquisition of Whole Foods in 2017 to storm the U.S. grocery industry. That has resulted in rollercoaster profits in the past, but revenue has largely grown at a breakneck pace as consumers shifted shopping online and away from brick-and-mortar stores.

Amazon’s more subdued expectations for this year’s holiday shopping season, which runs from the U.S. Thanksgiving holiday in late November through New Year’s, came as a surprise. It forecast that fourth-quarter sales will rise between 10 percent and 20 percent, or up to $72.5 billion, while analysts were expecting $73.9 billion, according to Refinitiv data.

That would be Amazon’s lowest quarterly sales growth since at least the start of 2016.

Eugene Kim of CNBC.com reported that Amazon’s other businesses are seeing high growth:

The results show how Amazon could have a disappointing holiday season in its all-important fourth-quarter, as the overall business sees a slight deceleration in growth. At the same time, it highlights the growth of Amazon’s high-margin businesses, like its cloud and advertising units, that are more profitable than its core retail segment.

Its fourth-quarter operating income guidance of $2.1 billion to $3.6 billion was also below Street expectations of $3.9 billion. Amazon said the wage increase announced earlier this month was incorporated into the guidance, but declined to quantify its impact.

Total revenue increased 29 percent from last year. North American sales were $34.3 billion, up 35 percent from last year, while international sales grew just 13 percent to $15.5 billion. AWS continued to show strong growth, jumping 46 percent in sales, although it narrowly missed expectations. Amazon’s “other” category, mostly comprised of its burgeoning advertising business, jumped 123 percent to $2.5 billion in revenue.

Ben Fox Rubin of CNET.com reported that Amazon’s Prime Day sales couldn’t save its results:

The boost Amazon received from Prime Day wasn’t high enough to vault the retail giant over Wall Street’s expectations.

Amazon said Thursday that its third-quarter revenue jumped 29 percent, to $56.6 billion, helped by a take from its annual Prime Day sale that RBC Capital Markets estimated at $2 billion. Amazon’s increased revenue still fell shy of the $57.1 billion analysts had predicted, though. The tech powerhouse said revenue was hurt by changes in foreign exchange rates.

Investors weren’t looking for excuses; shares fell more than 8 percent, to $1,632.61, in after-hours trading.

On the good side, the world’s largest e-commerce site reported profit of $2.9 billion, up from $256 million a year ago, and continuing its streak of $1 billion-plus quarterly results following years of meager profits or losses.