Amazon is predicting a less than bumper holiday trading period this year, as it faces fierce competition from Walmart and other rivals.
The company said after markets closed on Thursday that it is forecasting net sales in the range of $80bn (£62.1bn) to $86.5bn (£67.1bn) for the fourth quarter which includes Christmas.
That fell short of analysts’ sales predictions of around $87.37bn (£67.8bn).
Amazon also said it expected operating income in the fourth quarter to be between $1.2bn and $2.9bn, some way short of analysts’ expectations of around £4.19bn, according to the research firm FactSet.
The downbeat forecast from the world’s biggest online retailer sent its shares down by as much as 9%, as sales during the holiday season tend to generate the majority of retailers’ sales and profit.
Amazon’s outlook will fuel worries that the ongoing trade war between the US and China is hitting the American retail industry.
The forecasts come as Amazon’s profits dropped in the third quarter – the first decline in two years.
Net income fell 25% to $2.13bn, or $4.23 per share, from $2.88 billion, or $5.75 per share, a year earlier.
Revenue growth was positive overall but it slowed for the company’s lucrative AWS cloud computing business.
The fall in profits was attributed to heavy investment in bringing same-day delivery across its whole global range.
Amazon spent more than $800m on the strategy in the second quarter, and has suggested it would spend even more this quarter.
Jeff Bezos, Amazon’s founder and chief executive, said: “We are ramping up to make our 25th holiday season the best ever for Prime customers – with millions of products available for free one-day delivery.
“Customers love the transition of Prime from two days to one day – they’ve already ordered billions of items with free one-day delivery this year. It’s a big investment, and it’s the right long-term decision for customers.”
eMarketer Analyst Andrew Lipsman saidL “AWS has fuelled Amazon’s margin expansion of late but the continued softening in growth rates will weigh on the company’s profits if they can’t reverse the trend.”
“At the same time, the advertising and commerce sides of the business look very strong as investments in next-day shipping, though eating into the bottom line in the near term, are paying fast dividends on the top line.”
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