Amazon’s shares drop as it disappoints with guidance on Q3 sales

Shares in Amazon.com declined by 5% following the release of its quarterly results

An Amazon fulfillment centre building in Las Vegas. Photograph: iStock by Getty Images

An Amazon fulfillment centre building in Las Vegas. Photograph: iStock by Getty Images

 

Amazon.com forecast for third-quarter sales missed Wall Street expectations on Thursday, as consumers return to brick-and-mortar stores after shopping more online for the past year due to the pandemic.

Shares of Amazon, which is only $170 billion (€143 billion) away from joining the $2 trillion (€1.68 trillion) market cap club, were down 5 per cent in extended trading.

The company expects current-quarter sales of between $106 billion (€89 billion) and $112 billion (€94.2 billion), or to grow between 10 per cent and 16 per cent.

Analysts were expecting $118.90 billion (€100 billion), according to IBES data from Refinitiv.

The speedy vaccine rollout and easing of restrictions have led consumers to venture out to stores, while adapting new ways of shopping such as click-and-collect, in competition with fast delivery services for online orders provided by Amazon and its peers.

The company also reported a rare quarterly sales miss, amid competition from retailers such as Walmart and Target that have ramped up their online businesses over the past year.

Harmful drug ingredients

Amazon’s net sales rose to $113.08 billion (€95.13 billion) in the second quarter ended June 30th from $88.91 billion (€74.8 billion), a year earlier. Analysts on average had expected $115.20 billion (€96.9 billion), according to IBES data from Refinitiv.

Earlier, it emerged that the US Food and Drug Administration (FDA) had notified Amazon.com over the sale of sexual enhancement and weight-loss products that had potentially harmful drug ingredients, in a letter addressed to the company’s new boss Andy Jassy.

The FDA had already warned consumers in December to avoid male enhancement and weight-loss products sold through Amazon, eBay and other retailers, citing hidden dangerous drug ingredients.

In a letter dated July 26th, the FDA said it tested dozens of products it bought from December 2019 to February 2020 and found they contained one or more of the drug ingredients sildenafil, tadalafil and vardenafil.

None of these ingredients were named in the products’ labelling, the health regulator said.

Sildenafil, tadalafil and vardenafil are active ingredients in FDA-approved prescription drugs Viagra, Cialis and Levitra, which are used to treat erectile dysfunction.

Those ingredients could interact with some prescription drugs and may lower blood pressure to dangerous levels, the FDA said.

“We continue to find potentially dangerous products available for purchase and urge stores, websites and online marketplaces, including Amazon, to do more to protect consumers by not selling or facilitating the sale of potentially dangerous and illegal FDA-regulated products,” the health regulator said on Twitter on Thursday.

In one instance, the FDA said it had purchased a product from the Amazon website which the company had previously said it had restricted, adding it was concerned the e-commerce website’s filters were inadequate.

The FDA has asked Amazon to submit a written response within 15 working days on steps it has taken to address such violations. – Reuters