Analysts had expected third-quarter revenues of $57.1 billion in revenue, but Amazon reported $56.6 billion-which is still up 29% from a year ago. This guidance anticipates an unfavorable impact of approximately 80 basis points from foreign exchange rates.
Amazon.com issued a disappointing revenue and profit forecast for the busy Christmas quarter, suggesting sales growth is slowing for the e-commerce giant while higher pay for warehouse workers could hurt its profits.
While the Street was looking for $73.9 billion in net sales next quarter, Amazon projected a range of between $66.5 billion and $72.5 billion. In recent after-hours trading, the company's shares were off $157.16, or 8.8%, to $1,625.01.
"With consumer sentiment and employment rates near 18-year highs and ongoing store closures in the USA, we believe Amazon's strong retail sales growth will continue through the balance of the year and beyond", the analyst added. Deloitte Insights is predicting that consumers will increase spending by as much as 22% this holiday season.
In a bid to siphon shoppers away from Amazon, both Walmart and Target this week stepped up their free two-day shipping programs, which are available for customers without a membership fee. Amazon isn't disclosing the total cost of the raises.
Those retail rivals made that change a few months after Amazon chose to raise Prime's annual fee to $119, which could hamper Amazon's sales.
The moves underscore the increasingly competitive landscape as retailers battle it out for your business.
Amazon's bottom line is being affected by its heavy investment in cloud data centers and voice-based hardware, and by its decision to bump up its starting wage for USA workers to $15 an hour, amid criticism of low pay. The company says it had operating income of $3.7 billion during its latest third quarter; in comparison, its third quarter in 2017 had an operating income of $347 million. But Amazon investors learned long ago to focus more on revenue growth, because of Jeff Bezos' longtime strategy to focus on growing market share rather than paying out dividends. Amazon, however, did manage to narrow losses from its global business.
And the company continued to see success in advertising.
"Overall, Amazon's growth trajectory remains solid, including advertising, grocery, pharmacy, and specialty retail, as well as Amazon Business ($10 billion in sales in eight countries) and Amazon Web Services", Telsey Advisory Group analysts said.
First published at 1:18 p.m. PT. Updated at 2:04 p.m. PT: Adds finance chief's comments.