Higher energy prices and inflation are hitting e-commerce giant Amazon.
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Amazon sees a 2% to 8% growth in sales for the fourth quarter of the year, way below the previous two years.
Amazon sales are slowing globally — particularly in Europe, amid the Ukraine war.
Amazon’s share price fell 12.7% to $96.84 in after-hours trade.
Amazon has just projected the company’s slowest fourth-quarter growth ever — signalling trouble ahead for retailers entering the key holiday season.
In its third-quarter earnings report, Amazon — the world’s largest online retailer — said it expects sales for the holiday quarter to come in at $140 billion to $148 billion. This is well below an expected $155.2 billion, according to analysts polled by Reuters.
Amazon’s sales forecast marks a 2% to 8% growth over the same quarter in 2021 — but this is way below a 9% and 38% on-year growth seen in the final quarters of 2021 and 2020, respectively. Amazon’s glum forecast joins the ranks of gloomy outlooks from Big Tech giants like Alphabet and Meta.
To weather the headwinds, Brian Olsavsky, Amazon’s Chief Financial Officer, said on a reporters’ call, that Amazon would be “taking actions to tighten our belt, including pausing hiring in certain businesses and winding down products and services.”
“We are seeing signs all around that, again, people’s budgets are tight, inflation is still high, energy costs are an additional layer on top of that caused by other issues,” Olsavsky told the reporters, per Reuters. “We are preparing for what could be a slower growth period, like most companies.”
Sales are slowing in North America and internationally — particularly in Europe, where the Ukraine war has driven up energy prices and inflation, Olsavsky said in a call with analysts on Thursday, according to a transcript. This means consumers and organizations “of all sizes” are re-evaluating their expenditures, he added.
Sales growth have already started slowing in the third quarter and the trend is likely to persist through the fourth quarter, which spans the holiday season, Olsavsky said.
Amazon’s share price fell 12.7% to $96.84 in after-hours trade, erasing about $140 billion of the company’s market capitalization, per Reuters. The company’s shares have lost nearly 42% of their value so far this year.