The cratering global economy has started to ding Amazon purchases.
Not that the Netco wants to talk about it much. During the company’s third quarter earnings call with analysts Wednesday, execs glancingly referred to a deceleration in purchases over $1000 toward the end of period, when the global markets took a dive, but provided few details beyond that.
Execs instead stressed how well positioned Amazon is for the downturn as a value proposition. And indeed Netco’s overall results were good for its latest earnings period: the etail giant reported a 19% gain in third quarter media sales to $2.5 billion worldwide. Profit surged 48% to $118 million, thanks in part to a $15 million benefit from fluctuations in foreign currencies.
“I love our position today in the marketplace because we have spent so much time making sure were are the low cost provider,” said topper Jeff Bezos, who cited the company’s free shipping and low prices as everyday values that should grow even more enticing in tough times.
Nonetheless, CFO Tom Szkutak acknowledged that the imploding global economy makes forecasting especially challenging for the crucial fourth quarter period.
It’s hard to tell what will happen, “which is why we’ve given such a wide range in our guidance,” Szkutak said. “All companies have limited visibility right now — and we’re no different.”
Amazon is projecting net sales of $6 billion to $7 billion for the fourth quarter, but analysts had been projecting the higher end. Investors punished the stock in after-hours trading, with shares falling double digits after the Netco released its guidance.
Amazon’s report had been highly anticipated as an indicator how online retailers will fare in the downturn. Other etailers have been hit by the retail slowdown: eBay slashed jobs earlier this month on slowing growth, and earlier this week Netflix acknowledged that the economy had taken a greater toll on it than expected in the third quarter.
Szkutak told analysts that it had lowered its full year guidance by $600 million as an “appropriately conservative” measure. It had not previously projected fourth quarter guidance.
Amazon was more bullish on Kindle sales, noting that digital book sales now account for more than 10% of unit sales for tomes available in digital and print. According to Bezos, these sales have yet to cannibalize print sales.
“So far what we’ve seen with Kindle book purchases is they’re additive,” he said. “Obviously that’s a very positive outcome and we hope that continues.”