Andy Jassy, CEO of Amazon.Com Inc., speaks through the GeekWire Summit in Seattle, Washington, U.S., on Tuesday, October 5, 2021.
David Ryder | Bloomberg |
Amazon cites an unusually lively news cycle as one among the explanations for its weak revenue forecast.
In a conference call with reporters after the discharge of the quarterly report on Thursday, Amazon Chief Financial Officer Brian Olsavsky said one among the explanations the corporate expects a decline in online shopping this quarter is consumer distractions, resembling the Olympic Games in Paris, which began last month and run through August 11, and preparations for the US presidential election in November.
Olsavsky also referred to the attempted assassination of former President Donald Trump at a rally in Pennsylvania last month, which took place shortly before the Republican National Convention.
“Customers’ attention span is limited,” says Olsavsky. “When things happen that are in the spotlight, or the assassination attempt a few weeks ago, you see people focus their attention on the news. It’s more about distraction.”
For the third quarter, which runs through September, Amazon expects revenue of $154 billion to $158.5 billion. The midpoint of $156.25 billion was below consensus estimates of $158.24 billion, in response to LSEG. The disappointing forecast, coupled with a decline in second-quarter revenue, sent Amazon shares down greater than 7 percent in prolonged trading.
The chaotic news cycle is not the only factor affecting consumer spending habits, and that topic wasn’t even addressed by company executives on the conference call with analysts.
An enormous theme they addressed on the conference call with analysts is that shoppers remain cautious about spending resulting from economic challenges. CEO Andy Jassy said consumers are buying cheaper items, meaning the typical selling price (ASP) of products sold is lower.
“Customers continue to price down when they can,” Jassy said. “More luxury items like computers, electronics or televisions are growing faster here than elsewhere in the industry, but slower than in a more stable economy.”
In the conference call with the media, Olsavsky said consumers “remain cautious” and are more focused on buying on a regular basis items, which explains why Amazon’s sales were “a little underwhelming” this quarter.
Other e-commerce corporations have made similar observations. Wayfair Inflation and a stagnant real estate market led to a decline in purchases of household goods. Etsy CEO Josh Silverman said in an interview with CNBC’s “Squawk Box” following the discharge of second-quarter results on Wednesday that “these are tough times for the consumer” and that “every industry is really feeling this.”
As for the Olympics, Amazon’s loss is a gain for NBCUniversal. The company, which is the parent company of CNBC, announced this week that it earned not less than $1.25 billion in promoting revenue from broadcasting the Paris Olympics.
“More than 70% of advertisers for the 2024 Summer Olympics are new, with nearly half a billion dollars coming from first-time sponsors,” the corporate said in a opinion On Wednesday.
Although it is a short-term outlier for Amazon, it makes forecasting difficult, in response to Olsavsky.
“Often purchases are postponed and you know that people will come back and buy what they wanted to buy,” he said.
Disclosure: CNBC parent company NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. broadcast rights holder for all Summer and Winter Games through 2032.
