Is the cost of hiring workers and bolstering its fulfillment network taking a toll on Amazon’s bottom line?
Wall Street analysts are betting that the answer is yes. On average, they see the Seattle tech giant posting earnings of $8.92 per share, down from $12.37 per share a year ago, even as the company’s sales grow 16% to $111 billion for the quarter ended Sept. 30, toward the high end of the company’s prior guidance.
The company this week added to that impression, detailing the ways it’s gearing up for the upcoming holiday season, attempting to overcome bottlenecks in the global supply chain.
“Our teams have been hard at work for months, focusing on capacity and demand planning to balance our customers’ needs against any supply chain or transportation challenges that may occur,” wrote John Felton, senior vice president of global delivery services. “While we are always investing in our supply chain and transportation network, we have done even more this year to ensure we don’t let recent supply-chain constraints impact the Amazon experience for our customers.”
In addition to expanding its fulfillment network, Amazon has been spending more to attract and retain workers in the tight labor market. Its average starting wage in the U.S. is now $18/hour.
Amazon reports its third-quarter earnings Thursday after the market closes.
Of course, the best estimates of analysts oft go astray, and Amazon is frequently unpredictable. In the second quarter, the trends went the opposite way, with revenue falling short of expectations and profits exceeding them.
Other areas to watch include the company’s revenue from advertising, Amazon Web Services, and other businesses apart from retail sales.
As of the second quarter, Amazon was approaching a notable milestone, with revenue from direct and third-party retail sales on track to represent less than half of Amazon’s overall revenue for the first time in its history — poised to be surpassed by revenue from AWS, Amazon Prime, third-party seller services, online advertising and other services.
Check back Thursday afternoon for full coverage on GeekWire.
