Amazon warns of Q4 challenges, after Q3 profits drop

Amazon has reported a drop in income for the third quarter ending 30 September 2022, and warned against profits going into its Q4 peak trading period.

The retailer's operating income decreased to £2.1 billion ($2.5 billion), against £4.2 billion ($4.9 billion) in the third quarter of 2021. The international segment's operating loss was £2.1 billion ($2.5 billion), compared with £781 million ($900 million).

Net sales increased 15% to £110.2 billion ($127.1 billion) in the third quarter, compared with £96.1 billion ($110.8 billion) in 2021. International sales decreased 5% to £24 billion ($27.7 billion), but increased 12% excluding changes in foreign exchange rates.

Looking ahead, Amazon said its results in the fourth quarter are "inherently unpredictable and may be impacted by challenges from the pandemic, fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions, customer demand and spending, inflation, interest rates, global supply chain constraints and world events".

The retailer expects Q4 net sales between £121-128 billion ($140-$148 billion), or to grow between 2%-8% against 2021. This guidance anticipates an impact of approximately 460 basis points from foreign exchange rates.

In addition, operating income is expected to be between £0-£3.4 billion ($0-$4 billion), compared with £3 billion $3.5 billion in the fourth quarter of 2021.

Andy Jassy, CEO of Amazon, said: "We’re encouraged by the steady progress we’re making on lowering costs in our stores fulfilment network, and have a set of initiatives that we’re methodically working through that we believe will yield a stronger cost structure for the business moving forward.

"There is obviously a lot happening in the macroeconomic environment, and we’ll balance our investments to be more streamlined without compromising our key long-term, strategic bets. What won’t change is our maniacal focus on the customer experience, and we feel confident that we’re ready to deliver a great experience for customers this holiday shopping season.”