Amazon CEO Andy Jassy speaks at the GeekWire Summit on Tuesday, October 5, 2021, in Seattle, Washington, USA.
David Ryder | Bloomberg | Getty Images
Amazon cited an unusually busy news cycle as one of the driving factors behind its weak revenue forecast.
On Thursday, Amazon Chief Financial Officer Brian Olsavsky said in a phone interview with reporters after the release of the company’s second-quarter earnings report that the company expects one of the reasons for the decline in online shopping this quarter to be consumers. Distraction. The Paris Olympics, which started last month, and the upcoming 2024 presidential election in November.
Olsavsky also pointed to an assassination attempt on former President Donald Trump at a rally in Pennsylvania last month on the eve of the Republican National Convention.
“Customers’ attention span is limited,” Olsavsky said. “When something high-profile happens, or the assassination attempt a few weeks ago, you see people turn their attention to the news. It’s more of a distraction.”
Amazon said it expected revenue of $154 billion to $158.5 billion in the third quarter ending in September. The midpoint of that range was $156.25 billion, below consensus estimates of $158.24 billion, according to LSEG. The disappointing guidance, coupled with lower-than-expected second-quarter revenue, caused Amazon’s stock price to fall more than 7% in after-hours trading.
A chaotic news cycle isn’t the only factor affecting consumer spending patterns, and company executives didn’t even broach the subject during its quarterly earnings call with analysts.
One big issue they do address is that shoppers continue to be wary of spending due to economic challenges. CEO Andy Jassy said on an analyst call that consumers are buying cheaper items, which means the average selling price (ASP) of the products being sold is lower.
“Customers will try to lower prices as much as possible,” Jassy said. “For us, discretionary, higher-priced items like computers, electronics or televisions are growing faster than we see elsewhere in the industry, but at a faster rate than we see in a stronger economy. Be slow.
Olsavsky said on a media call that consumers “continue to be cautious” and put more emphasis on buying daily necessities, which helps explain why Amazon’s revenue this quarter was “slightly short.”
Other e-commerce companies have made similar observations. wayfel Purchases of home furnishings have slowed due to inflation and a stagnant housing market. etsi “This is a tough time for consumers,” CEO Josh Silverman told CNBC’s “Squawk Box” after second-quarter earnings were released on Wednesday. The industry is really seeing this.”
When it comes to the Olympics, Amazon’s loss is NBCUniversal’s gain. The company, which owns CNBC, said this week that advertising revenue from broadcasting the Paris Olympics would reach at least $1.25 billion.
“More than 70% of advertisers for the 2024 Summer Olympics are new customers, with nearly $500 million coming from first-time sponsors,” the company said in a statement. statement Wednesday.
For Amazon, this is just a short-term phenomenon, but Olsavsky said it makes for a tough forecast.
“A lot of times, purchases are delayed because you know people are going to come back and buy what they’re going to buy,” he said.
Revealed: CNBC parent company NBCUniversal owns NBC Sports and NBC Olympics. NBC Olympics is the U.S. rights holder for all summer and winter Olympics through 2032.
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