Amazon has been severely hit by labor supply shortages, increased wage costs, and global supply chain issues, resulting in its net income decreasing to $3.2 billion in the third quarter (Q3), compared with $6.3 billion in the same period last year.
Amazon shares were down more than 4 percent in extended trading after the company reported weaker-than-expected results late on Thursday and gave poor guidance for the holiday quarter (Q4).
In a statement, Amazon CEO Andy Jassy said that in the fourth quarter (Q4), the company expects to “incur several billion dollars of additional costs in its consumer business”.
This is because Amazon is managing “through labor supply shortages, increased wage costs, global supply chain issues, and increased freight and shipping costs — all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season,” Jassy informed.
“It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners,” he added.
Amazon reported revenue of $110.81 billion (vs $111.6 billion expected) in the September quarter.
For the fourth quarter, Amazon forecast sales between $130 billion and $140 billion, representing growth between 4 percent and 12 percent.
“Our revenue guidance for the fourth quarter reflects the current trends we are seeing. We are dealing with labor risks and supply chain interruptions, like many other companies, which increases our range of potential outcomes in Q4,” said Brian T Olsavsky, SVP and Chief Financial Officer.