Amazon missed third-quarter Wall Street estimates for sales and earnings as the company stated it had emphasized investment to meet the demands of a marketplace hit by the COVID-19 pandemic and related challenges rather than pushing profits.
Amazon posted third quarter net income of $3.16 billion, or $6.12 per diluted share, versus $6.33 billion, or $12.37 per diluted share, versus in the year-before period. Amazon missed a MarketBeat-published earning per diluted share estimate of $8.72 and a sales estimate of $111.66 billion.
Net sales were $110.81 billion and net product sales were $54.88 billion versus $96.15 billion and $52.77 billion respectively in the year-prior quarter. Operating income slipped from $6.19 billion to $4.85 billion in the period year over year.
Sales in North America advanced to $65.56 billion from $59.37 billion in the 2020 quarter. Operating income slipped from $2.25 billion to $880 million in the period year over year.
Amazon cited highlights for the quarter:
- Hosting Amazon Accelerate, its annual U.S. conference for selling partners, where the company announced new tools and capabilities including, this year, Local Selling, which enables sellers to provide both in-store pickup and fast delivery to nearby customers, and Global Selling tools that make it easier for U.S. third-party sellers to offer their products in Amazon’s 21 national sites worldwide.
- Expanding its faster Same-Day Delivery service to Atlanta, Baltimore, Charlotte, Chicago, Detroit, Houston, Miami, Minneapolis, and Tampa, which brings the number of cities with the service to 15.
- Debuting a new gift-giving feature that enables Prime members in the United States to use the Amazon mobile shopping app to send gifts with just the recipient’s email or mobile phone number, with recipients receiving an email or text gift message allowing them to accept the gift and set a delivery address.
- Integrating Just Walk Out payment technology into two new Whole Foods Market locations in Sherman Oaks, CA, and Washington, D.C.
Andy Jassy, Amazon CEO, said, “We’ve always said that when confronted with the choice between optimizing for short-term profits versus what’s best for customers over the long term, we will choose the latter, and you can see that during every phase of this pandemic. In the first several months of COVID-19, Amazonians played an essential role to help people secure the requisite PPE, food, and other in-demand items needed, and we worked closely with businesses and governments to leverage AWS to maintain business continuity as they responded to the pandemic.
“Customers have appreciated this commitment, which is part of what’s driving this past quarter’s AWS growth acceleration to 39% year over year,” Jassy continued. “But, it’s also driven extraordinary investments across our businesses to satisfy customer needs: Just one example is that we’ve nearly doubled the size of our fulfillment network since the pandemic began. 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, all while doing whatever it takes to minimize the impact on customers and selling partners this holiday season. It’ll be expensive for us in the short term, but it’s the right prioritization for our customers and partners.”
