Amazon.com Inc. on Thursday reported a slump in profit that it expects will continue through the holiday quarter, as heavy spending to maintain delivery operations diminishes the company’s windfall from online shopping.
Shares fell 4% in after-hours trading.
After a year of blockbuster results, the world’s largest online retailer is facing a tougher outlook. In a tight labor market, it has boosted average warehouse pay and marketed ever bigger signing bonuses to attract blue-collar workers it needs to keep its high-turnover operation humming.
The company meanwhile is contending with global supply chain disruptions. It has doubled its container processing ability, expanded its delivery service partner program and is ramping up its warehouse investments — all at a noteworthy cost.
The company said it expects operating profit for the current quarter to be between $0 and $3.0 billion, short of $6.9 billion Amazon posted the year prior. In the just-ended third quarter, net income fell by about 50% to $3.16 billion, a first since the start of the coronavirus pandemic in the United States.
Andy Jassy, who took the helm of Amazon as CEO in July, said in a statement the company would incur several billion dollars of extra expenses in its consumer business to deal with higher shipping costs, increased wages and labor shortages.