Amazon has stated that it is preparing for a more difficult business climate in the coming months, echoing concerns of several companies that tariffs and related economic turbulence can undermine consumer spending.
When he released his results on Thursday, the world’s largest online retailer recorded a decent first quarter, but said operating profit in the current period would be weaker than Wall Street predicted.
Amazon has designed an operating profit of $ 13 billion to $ 17.5 billion compared to an average estimate of $ 17.8 billion. Sales will be between $ 159 billion and $ 164 billion in the period ended in June, the company said in a statement. Analysts, on average, expected $ 161.4 billion.
Read more:
By disclosing its forecast, Amazon said the results can be “materially affected by many factors,” such as exchange rates and “recession contents.” Amazon did not mention rates in its first quarter forecast in early February.
“Obviously, none of us know exactly where tariffs will be fixed or when,” CEO Andy Jassy said in a teleconference after the results of the results. “We have not seen any reduction in demand. To some extent, we observed an increase in purchases in certain categories, which may indicate an increase in stocks before any potential tariff impact.”
Continues after advertising
First quarter sales increased by 9%to US $ 155.7 billion compared to an average estimate of US $ 155.2 billion. The operating profit was US $ 18.4 billion in the period ended March 31. Analysts projected $ 17.5 billion.
The company’s reputation for competitive prices and a broad base of suppliers could isolate it if consumers focused more on offers. But a retraction of the independent Chinese salespeople who help supply Amazon warehouses could affect high margin logistics and advertising business.
There are already signs of slowdown. Revenue with outsourced salespeople services increased by 6%to US $ 36.5 billion in the first quarter, being below the average estimate of analysts. Advertising, which has been the company’s fastest growth unit, grew 18%to $ 13.9 billion, in line with estimates.
Continues after advertising
“Advertising on Amazon remains vulnerable to spending cuts of many small and medium -sized sellers that will be most affected by China’s products, and third party market revenue growth has slowed significantly from levels of just a few quarters ago,” said Sky Canaves, an Emarketer analyst.
The shares fell about 2% on Friday’s pre-market after closing $ 190.20 in New York. The shares fell about 13% this year, while Wall Street evaluated the impact of President Donald Trump’s fares on a retail operation that gets much of his China products.
Amazon Web Services, the largest rented computational seller, reported that first quarter sales increased 17%to $ 29.3 billion, in line with analysts estimates. It was the slowest growth of the unit in a year and contrasted with Microsoft.
Continues after advertising
Amazon’s biggest rival in the cloud sector recorded an exceptional quarter this week, reporting higher sales and profits than expected, suggesting that customer demand for cloud services remained stable despite the wave of tariffs and economic turmoil.
Gil Luria, Davidson & Co. analyst, said Amazon investors “may be a bit disappointed by margins and margin guidelines, which can generate concerns about the absorption of tariff costs by Amazon. Although AWS has grown almost as expected, it is due to the fact that Microsoft Azure has exceeded expectations and expanded its business almost twice more fast ”.
The White House hardly criticized Amazon earlier this week after news that the company would be considering displaying the cost of tariffs to consumers. Amazon said it was considering – and has no plans to implement – the disclosure of the cost of imports from Haul, its Temu -like online store, which sells cheap products sent directly from Chinese sellers.
Continues after advertising
Director Brian Olsavsky said Amazon is planning “various results” regarding trade and the economy in general.
“We have taken a number of measures to protect the customer experience,” Olsavsky said in the teleconference. “We are doing everything we can to keep prices low for customers in a way that makes economic sense.”
