The sales prospects of the Amazon holiday season miss out on stock shares views

(Reuters) – Amazon.com Inc (AMZN.O) predicts sales and profits to be lower than Wall Street's holiday goals, with revenue growth expected to be the slowest of the year, reducing the largest online retailer's shares by over 8%. world.

Amazon's third-quarter sales were also lower than estimates. Analysts said the international results were disappointing and online competition was increasing. The company blamed the accounting changes and warned that it was cautious in its outlook.

For years, Amazon has made expensive bets on new technologies and new programs, such as its $ 13.7 billion acquisition of Whole Foods in 2017, aimed at storming the global consumer electronics industry. Grocery store in the United States. This has translated into rollercoaster profits in the past, but revenues have risen sharply at a breakneck pace as consumers have relocated their online purchases instead of moving away from traditional stores.

"Sluggish revenue growth has been a sore," said George Salmon, an analyst at Hargreaves Lansdown. "And when you trade on 70 times the expected profits, it does not take much to upset the course of action."

Amazon's more moderate expectations for this year's holiday shopping season, which runs from Thanksgiving holidays in the United States to the end of November in the New Year, were particularly surprising. According to Refinitiv data, fourth-quarter revenue is expected to grow by 10 to 20 percent, or even $ 72.5 billion, while analysts forecast $ 73.9 billion.

This would be the lowest quarterly growth in Amazon's sales since at least the beginning of 2016. In the last four quarters, sales have increased from 29% to 43%.

Brian Olsavsky, chief financial officer of Amazon, said no fundamental changes had occurred, just a few holidays in India and accounting differences.

"We are expecting a good holiday season, so there is no message in our forecasts on this," he said during a conference call with the media. "We have everything ready to roll."

The company has moved the registration of $ 300 million of premium subscription revenue from the fourth quarter to previous periods of the year, he said. In addition, Amazon is facing a harder year-over-year comparison because the deal with Whole Foods in the third quarter of 2017 and the different Diwali holiday schedule have affected the sales structure, he said.

"Amazon has seen a significant slowdown in its international division. That's why investors were not ready, "said Chaim Siegel, an analyst at Elazar Advisors.

According to FactSet estimates, Amazon's operating profit for the fourth quarter is between $ 2.1 billion and $ 3.6 billion, less than the $ 3.87 billion expected by analysts.

Neil Saunders, Managing Director of GlobalData Retail, said the results reflected a changing landscape as retailers stood out of everything they could on Amazon.

"Others are beginning to better tackle its dominance," he said, citing Walmart (WMT.N), Target TFT.N and Macy's (m.n).

BENEFITS AND THIRD PRODUCTS

Despite the slowdown in sales growth, Amazon has become progressively more profitable.

Third quarter net income was $ 2.88 billion, or $ 5.75 per share, compared with $ 256 million or 52 cents a share a year ago.

Nearly 53 percent of the goods sold on Amazon now come from third-party merchants, the company announced Thursday, marking a gradual break with the traditional retail business where Amazon is the seller of a product.

This means that the company receives less revenue but absorbs a lucrative reduction in sales from other sellers – all the more profitable as merchants pay Amazon to handle their shipments. Vendor Services grew 31% to $ 10.4 billion in the third quarter.

"They are indifferent if they sell us their own products or third party products, so they should not be punished for the latter," said Michael Pachter, an analyst at Wedbush Securities.

More and more vendors are turning to Amazon to market their products – another highly profitable business. Amazon attracts advertisers because users typically use the site to shop, unlike users who visit Alphabet Inc (GOOGL.O) Google, the ad sales manager, to search for general information or compete with Facebook Inc. (FB.O) to see updates from their friends.

Amazon said revenue for this category and some other items rose 122 percent to $ 2.5 billion in the third quarter. Analysts were expecting $ 2.4 billion, according to Refinitiv data.

Olsavsky, the chief financial officer, also said the company was operating more efficiently, hiring less than in the past and increasing storage space.

"We have really been able to reduce a number of key areas," Olsavsky told reporters, citing cost improvements for Amazon Web Services.

Global cloud revenue 1 revenue grew 45.7 percent to $ 6.68 billion from $ 6.67 billion previously.