Amazon profits hit by rising shipping costs – BBC News

20
68
Amazon profits hit by rising shipping costs – BBC News

AmazonImage copyright
Getty Images

Amazon delivered another quarter of sales growth above 20%, but a spike in shipping costs cut the firm’s bottom line.

Shares dropped sharply in after-hours trade after the e-commerce giant said profits fell by about 25% to $2.1bn in the three months to 30 September.

The firm said it spent nearly $10bn (£7.78bn) on shipping costs in the most recent quarter, up 46% from last year.

But sales rose 24% year-on-year to $70bn.

Amazon boss Jeff Bezos said the company’s push to offer one-day shipping to its Prime members, which has contributed to increased costs, will pay off. Purchases by Prime members have accelerated alongside the one-day offering, executives said.

“It’s a big investment, and it’s the right long-term decision for customers,” Mr Bezos said.

However, investors were disappointed by the e-commerce company’s sales forecast for the last three months of the year.

Amazon said it expected sales growth of 11% to 20% in the upcoming quarter, which includes the critical festive season. It pinned that expected deceleration in part on the recent increase in Japan’s consumption tax, which it said would depress purchases.

The sales prediction helped to send the firm’s shares down more than 6% in after-hours trade.

“Whether all the extra investment will be worth it in the end is perhaps open to question, especially given the lacklustre sales guidance for next quarter,” said Nicholas Hyett, analyst at Hargreaves Lansdown. But, he added, “it’s been foolish to doubt Amazon in the past.”

‘Softening growth’

Amazon’s overall revenue gain occurred despite slowing growth in the firm’s cloud computing division, Amazon Web Services (AWS).

It reported sales of almost $9bn, up 35% from 2018. Last year, the unit, which is credited with lifting Amazon to profitability, posted year-on-year growth of 46%.

The deceleration is a potentially worrisome sign for investors looking at the bottom line, said Andrew Lipsman, an analyst at eMarketer, who called the quarter “a very mixed bag”.

“AWS has fuelled Amazon’s margin expansion of late but the continued softening in growth rates will weigh on the company’s profits if they can’t reverse the trend,” he said.

Amazon’s push into physical stores with its purchase of grocer Whole Foods also has yet to pay off. Sales in its physical stores declined 1% year-on-year, to about $4.2bn.

20 COMMENTS

  1. I simply want to say I am just new to weblog and seriously loved you’re blog. Likely I’m likely to bookmark your blog post . You absolutely have awesome articles. Thanks a bunch for sharing your web site.

  2. Very nice post. I simply stumbled upon your blog and wanted to mention that I’ve really enjoyed surfing around your weblog posts. In any case I’ll be subscribing to your rss feed and I am hoping you write again soon!

  3. Good day! Do you know if they make any plugins to assist with SEO? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good success. If you know of any please share. Kudos!

  4. hey there and thank you for your info – I’ve certainly picked up anything new from right here. I did however expertise some technical issues using this web site, as I experienced to reload the site many times previous to I could get it to load correctly. I had been wondering if your web hosting is OK? Not that I’m complaining, but slow loading instances times will sometimes affect your placement in google and can damage your high-quality score if advertising and marketing with Adwords. Anyway I am adding this RSS to my e-mail and could look out for a lot more of your respective intriguing content. Ensure that you update this again very soon..

  5. I’m impressed, I must say. Actually rarely do I encounter a weblog that’s each educative and entertaining, and let me inform you, you’ve gotten hit the nail on the head. Your concept is outstanding; the problem is one thing that not enough individuals are talking intelligently about. I am very joyful that I stumbled across this in my seek for something relating to this.

  6. I like what you guys are up also. Such intelligent work and reporting! Carry on the excellent works guys I have incorporated you guys to my blogroll. I think it’ll improve the value of my website 🙂

  7. You actually make it seem so easy with your presentation but I find this matter to be really something that I think I would never understand. It seems too complicated and extremely broad for me. I’m looking forward for your next post, I will try to get the hang of it!

  8. The next time I read a weblog, I hope that it doesnt disappoint me as a lot as this one. I imply, I do know it was my option to read, however I truly thought youd have something attention-grabbing to say. All I hear is a bunch of whining about something that you could possibly fix if you happen to werent too busy in search of attention.

  9. I really wish to show you that I am new to writing and absolutely loved your website. Very possible I am likely to bookmark your blog post . You certainly have excellent article material. Acknowledge it for expressing with us your current web information

  10. Hey there! This post could not be written any better! Reading this post reminds me of my old room mate! He always kept chatting about this. I will forward this write-up to him. Pretty sure he will have a good read. Thank you for sharing!

  11. Nice post. I was checking constantly this blog and I am inspired! Very useful information specially the final part 🙂 I take care of such information a lot. I used to be looking for this particular info for a long time. Thanks and good luck.

  12. I don’t even understand how I finished up here, but I thought this submit was great. I don’t recognise who you are however definitely you are going to a famous blogger for those who aren’t already 😉 Cheers!

LEAVE A REPLY

Please enter your comment!
Please enter your name here