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Amazon shares fell after announcing disappointing sales in the third quarter and the holiday outlook fell short of Wall Street expectations. Photographer: Jeenah Moon / Bloomberg
Faced with growing concern that rivals led by Walmart could begin to steal some of Amazon's thunder, Amazon shares collapsed on Thursday after investors ignored much better earnings than expected of the Seattle giant for the third quarter and focused instead on slowing its growth in e-commerce. disappointing earnings and sales outlook for the holiday quarter.
This concern was evident on a conference call with Amazon analysts hosted Thursday night when several questions focused on what led to its slowdown growth both in the US in and abroad; the financial impact of Amazon's recent initiative to raise the US minimum wage to $ 15 an hour; and its "omni-channel" projects at a time when Walmart, Target and other traditional and mortar retailers are doubling their e-commerce spending and operating their largest fleet of physical stores than Amazon's Whole Foods for pickup online grocery stores and other services attract buyers.
Amazon's chief financial officer, Brian Olsavsky, has tried to dispel some of these concerns. He explained that some of the weaknesses of Wall Street's expectations could be due to negative consequences of currency conversion, an accounting change on the product of premium subscription subscriptions and the Diwali festival schedule. key market in India this year compared to last year.
"A lot of our revenue comes from mid-November and late December," he said, referring to the outlook for the vacation quarter. "It's always difficult (to predict), but our warehouse is very clean. We are very optimistic in the fourth quarter. "
Time will tell if Amazon can deliver this quarter. However, despite worries about slowing its growth rate, Amazon still has a considerable lead over rivals.
For example, while Walmart's share of the US e-commerce market increased from 2.9% in 2012 to 4.3% in 2017, Amazon's share increased from 24% to 46%, according to Euromonitor data. In terms of traffic, the total number of online visits to Amazon during the year ending in August was four times higher than that of Walmart.com, according to Hitwise.
Here are three other key points to remember from Amazon's results.
Amazon is becoming more and more adult about its costs: Formerly known for its spending at the expense of profit, Amazon's profit reached $ 2.9 billion, or $ 5.75 per share – almost double the $ 3.11 expected by Wall Street – $ 256 million, or 52 cents a share, a year ago. While growth at units like AWS cloud service has remained a key factor of profit, this Olsavsky described as "cost improvement" have also played a central role.
Amazon's workforce, for example, has grown 13 percent in the first nine months of this year, compared with growth rates of at least 38 percent in the last two years. His square distribution center images also rose to about half the rate of the previous two years while the use of robots in the distribution centers offered good returns on capital "" Olsavsky I said.
Worldwide shipping costs in the 3rd quarter rose 22% to $ 6.6 billion – more than even what Amazon does in the bottom line, but the pace of the increase is the most small in at least six quarters.
"We have excellent cost performance in a number of areas," said the CFO.
Yes, the advertising service will steal more attention in the future: Amazon's largest online retail unit saw its sales off the currency impact increase barely 11%, the smallest gain in six quarters, its "other" unit, which primarily accounts for its advertising, sponsored products and other advertising revenues, more than doubled, the fastest-growing segment . It also surpassed Amazon's 46% growth rate of profit: the AWS cloud service.
The growth of Amazon's advertising service, where many consumers are starting their search for products these days, is just beginning. "Other" segment revenues, including advertising, totaled only $ 2.5 billion, compared with $ 6.7 billion in SAPN and Amazon's online store sales of $ 29 billion.
"We are seeing a very strong adoption" in our advertising service by vendors, authors and third-party sellers, said Olsavsky. "We continue to invent on the side of products and tools."
Amazon's turn to play catch-up on brick and mortar? Studies have shown that consumers want to shop and be able to see and send products to physical sites. We are closely watching the expansion of this business. Not to mention that physical stores have the added benefit of helping retailers reduce expensive last-mile delivery costs and get their products to consumers faster.
Amazon's latest quarter has expanded grocery delivery at Whole Foods to 60 cities and expanded grocery pick-up at 10, but still a ribbon of what Walmart has. It also added five more non-purchase Amazon Go stores in the last quarter to a total of six and opened a 4-star Amazon store featuring a selection organized in New York's SoHo to allow users to see and try certain products. in person. Its chain of physical bookstores has expanded to 18. A common feature among many of these stores: its Echo and Fire TV line of appliances powered by Alexa-smart-voice-assistant.
Through the purchase of Whole Foods in August 2017, physical store sales in the last quarter more than tripled, reaching $ 4.2 billion. Amazon's physical footprint also exists in other forms, including its partnership with Kohl's for processing its returns.
Amazon will "experiment with multiple ways to reach customers wherever they are," Olsavsky said Thursday. "There will be a lot of omnichannel overlap."
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Amazon shares fell after announcing disappointing sales in the third quarter and the holiday outlook fell short of Wall Street expectations. Photographer: Jeenah Moon / Bloomberg
Faced with growing concern that rivals led by Walmart could begin to steal some of Amazon's thunder, Amazon shares collapsed on Thursday after investors ignored much better earnings than expected of the Seattle giant for the third quarter and focused instead on slowing its growth in e-commerce. disappointing earnings and sales outlook for the holiday quarter.
This concern was evident on a conference call with Amazon analysts hosted Thursday night when several questions focused on what led to its slowdown growth both in the US in and abroad; the financial impact of Amazon's recent initiative to raise the US minimum wage to $ 15 an hour; and its "omni-channel" projects at a time when Walmart, Target and other traditional and mortar retailers are doubling their e-commerce spending and operating their largest fleet of physical stores than Amazon's Whole Foods for pickup online grocery stores and other services attract buyers.
Amazon's chief financial officer, Brian Olsavsky, has tried to dispel some of these concerns. He explained that some of the weaknesses of Wall Street's expectations could be due to negative consequences of currency conversion, an accounting change on the product of premium subscription subscriptions and the Diwali festival schedule. key market in India this year compared to last year.
"A lot of our revenue comes from mid-November and late December," he said, referring to the outlook for the vacation quarter. "It's always difficult (to predict), but our warehouse is very clean. We are very optimistic in the fourth quarter. "
Time will tell if Amazon can deliver this quarter. However, despite worries about slowing its growth rate, Amazon still has a considerable lead over rivals.
For example, while Walmart's share of the US e-commerce market increased from 2.9% in 2012 to 4.3% in 2017, Amazon's share increased from 24% to 46%, according to Euromonitor data. In terms of traffic, the total number of online visits to Amazon during the year ending in August was four times higher than that of Walmart.com, according to Hitwise.
Here are three other key points to remember from Amazon's results.
Amazon is becoming more and more adult about its costs: Formerly known for its spending at the expense of profit, Amazon's profit reached $ 2.9 billion, or $ 5.75 per share – almost double the $ 3.11 expected by Wall Street – $ 256 million, or 52 cents a share, a year ago. While growth at units like AWS cloud service has remained a key factor of profit, this Olsavsky described as "cost improvement" have also played a central role.
Amazon's workforce, for example, has grown 13 percent in the first nine months of this year, compared with growth rates of at least 38 percent in the last two years. His square distribution center images also rose to about half the rate of the previous two years while the use of robots in the distribution centers offered good returns on capital "" Olsavsky I said.
Worldwide shipping costs in the 3rd quarter rose 22% to $ 6.6 billion – more than even what Amazon does in the bottom line, but the pace of the increase is the most small in at least six quarters.
"We have excellent cost performance in a number of areas," said the CFO.
Yes, the advertising service will steal more attention in the future: Amazon's largest online retail unit saw its sales off the currency impact increase barely 11%, the smallest gain in six quarters, its "other" unit, which primarily accounts for its advertising, sponsored products and other advertising revenues, more than doubled, the fastest-growing segment . It also surpassed Amazon's 46% growth rate of profit: the AWS cloud service.
The growth of Amazon's advertising service, where many consumers are starting their search for products these days, is just beginning. "Other" segment revenues, including advertising, totaled only $ 2.5 billion, compared with $ 6.7 billion in SAPN and Amazon's online store sales of $ 29 billion.
"We are seeing a very strong adoption" in our advertising service by vendors, authors and third-party sellers, said Olsavsky. "We continue to invent on the side of products and tools."
Amazon's turn to play catch-up on brick and mortar? Studies have shown that consumers want to shop and be able to see and send products to physical sites. We are closely watching the expansion of this business. Not to mention that physical stores have the added benefit of helping retailers reduce expensive last-mile delivery costs and get their products to consumers faster.
Amazon's latest quarter has expanded grocery delivery at Whole Foods to 60 cities and expanded grocery pick-up at 10, but still a ribbon of what Walmart has. It also added five more non-purchase Amazon Go stores in the last quarter to a total of six and opened a 4-star Amazon store featuring a selection organized in New York's SoHo to allow users to see and try certain products. in person. Its chain of physical bookstores has expanded to 18. A common feature among many of these stores: its Echo and Fire TV line of appliances powered by Alexa-smart-voice-assistant.
Through the purchase of Whole Foods in August 2017, physical store sales in the last quarter more than tripled, reaching $ 4.2 billion. Amazon's physical footprint also exists in other forms, including its partnership with Kohl's for processing its returns.
Amazon will "experiment with multiple ways to reach customers wherever they are," Olsavsky said Thursday. "There will be a lot of omnichannel overlap."
