Amazon reveals a net sales increase in Q3, however Q4 is set to disappoint those hoping for a profitable holiday season.
Amazon announced recently its net sales have increased 15% to $127.1 billion in the third quarter. Last year, third quarter net sales sat at $110.8 billion. The first two quarters of the year saw loses for the company. Amazon credits an “obsession” over improving customer experience for these Q3 gains. In the last quarter, Amazon has premiered The Rings of Power, attracting millions of viewers to Prime video, premiered the inaugural season of Thursday Night Football in partnership with the NFL, introduced the Prime Early Access Sale, launched a Belgium website, opened new global fulfilment sites, partnered with Venmo, launched new devices, and much more.
“It’s clear that particularly during these uncertain economic times, customers appreciate Amazon’s continued focus on value and convenience,” said Andy Jassy, Amazon CEO. “We’re also encouraged by the steady progress we’re making on lowering costs in our stores fulfilment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.
Looking forward to Q4 2022, Amazon anticipates less sales than formerly forecasted by analysts. Expected to be between $140 billion and $148 billion, the number shies away from the predicted $156 billion revenue. Though anticipated net sales show growth on Q4 2021 between 2% and 8%. This guidance anticipates an unfavourable impact of approximately 460 basis points from foreign exchange rates.
CFO Brian Olsavsky says the company cut its capital expenditures budget by a third this year following a shift in focus from logistics during the height of the pandemic. Amazon has responded to rising costs by cutting warehouse space, pausing experimental projects, and freezing hiring for corporate retail roles.
“There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets.” Says CEO Andy Jassy. “What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”
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