Andy Jassy, CEO of Amazon.Com Inc., speaks during the GeekWire Summit in Seattle, Washington, U.S., Tuesday, Oct. 5, 2021.
David Ryder | Bloomberg | Getty Images
Amazon points to an unusually busy news cycle as one of the drivers behind its weak revenue forecast.
In a call with reporters after the company’s second-quarter earnings report Thursday, Amazon Chief Financial Officer Brian Olsavsky said one reason the company expects a slide in online shopping this quarter is because consumers are distracted . There are the Paris Olympics, which began last month and continue until August 11, and the run-up to the US presidential election in November.
Olsavsky also pointed to the assassination attempt on former President Donald Trump at a rally in Pennsylvania last month, which occurred shortly before the Republican National Convention.
“Customers only have so much attention,” Olsavsky said. “When high-profile things happen, or the assassination attempt a few weeks ago, you see people turn their attention to the news. It’s more about distraction.”
For the third quarter, which runs through September, Amazon said it expects revenue of $154 billion to $158.5 billion. The midpoint of the range, $156.25 billion, missed consensus estimates of $158.24 billion, according to LSEG. The disappointing guidance, combined with a second-quarter revenue miss, sent Amazon shares down more than 7% in extended trading.
The chaotic news cycle isn’t the only factor affecting consumer spending patterns, a topic company executives didn’t even mention to analysts.
A big issue raised by analysts on the call is that buyers continue to be cautious with their spending due to economic challenges. CEO Andy Jassy said consumers are buying cheaper items, which means there is a lower average selling price (ASP) on the products being sold.
“Customers continue to trade lower when they can,” Jassy said. “More discrete, higher ticket items like PCs, electronics or TVs are growing faster for us than we see elsewhere in the industry, but slower than we see in a stronger economy.”
On the media call, Olsavsky said consumers “continue to be cautious” and are more focused on buying everyday essentials, which explains why Amazon “underperformed a little bit on revenue” for the quarter.
Other e-commerce companies have made similar observations. Wayfair saw a slowdown in home goods purchases due to inflation and a stagnant housing market. Etsy CEO Josh Silverman said in an interview on CNBC’s “Squawk Box” after second-quarter earnings Wednesday that “it’s a tough time for the consumer” and that “every industry is really looking at it.”
When it comes to the Olympics, Amazon’s loss is NBCUniversal’s gain. The company, which is the parent of CNBC, said this week that it has hit at least $1.25 billion in ad revenue from its broadcast of the Paris Olympics.
“More than 70% of advertisers for the 2024 Summer Games are new, with nearly half a billion dollars coming from first-time sponsors,” the company said in a statement. statement on Wednesday.
It’s a short-term hit for Amazon, but what Olsavsky says makes for a tough forecast.
“A lot of times, purchases will be delayed and you know people will come back and buy what they were going to buy,” he said.
Disclosure: CNBC parent NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the US broadcast rights holder for all Summer and Winter Games through 2032.
