E-commerce giant says it sees increased global supply chain issues, higher freight and shipping costs
Amazon said it expects supply chain issues, higher shipping costs, and labor shortages to cost the company billions of dollars this October to December.
“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,” it said in a financial results statement released late Thursday.
The e-commerce giant said it will take measures to minimize the impact of the issues on its customers and selling partners during this year’s holiday season in the US, adding: “It’ll be expensive for us in the short term.”
Amazon’s third quarter financial results also came in weak, as net income fell and revenue missed market expectation.
Net income was just above $3.15 billion this July-September down half from $6.33 billion in the same period a year ago.
Net sales rose 15% to $110.8 billion, from $96.1 billion, year-on-year. However, the market expectation was $111.6 billion for the third quarter.
Amazon said it estimates net sales to come in between $130-$140 billion, or to grow 4%-12%, in the fourth quarter, from the same period of 2020.
Amid weak results and supply chain issues, Amazon’s stock price fell 4.8% on the Nasdaq in after-hours trading. It closed Thursday at $3,446.57 per share, up 1.6%.
As supply chain issues, higher shipping costs, and labor shortages continue to dominate global commerce, inflation continues to rise worldwide.
Twitter CEO and co-founder Jack Dorsey wrote on Oct. 23 on social media: “Hyperinflation is going to change everything. It’s happening.”
In response to a user, he replied: “It will happen in the US soon, and so the world.”