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Amazon’s disappointing guidance overshadows a strong close to 2024

The news: Amazon’s faster-than-ever delivery speeds—including over 65% more items supplied to US Prime members the same day or overnight than in Q4 2023—helped the retail giant best analysts’ expectations in Q4.

However, its weak outlook cast a shadow over those results as the retailer sees headwinds ahead.

The numbers:

  • Revenues rose 10.5% year over year (YoY) to $187.79 billion, outpacing LSEG’s forecast of $187.30 billion.
  • North America retail sales grew 9.5% YoY, with record results during Black Friday and Cyber Monday sales events that contributed to a holiday season that Amazon called its “most successful yet.”
  • Advertising revenues rose 18% YoY to $17.29 billion, slightly short of the $17.4 billion expected.
  • Earnings per share of $1.86 were up 86% YoY, well ahead of the $1.49 expected.

First, the bad news: The company expects Q1 sales to range between $151 billion and $155.5 billion, short of the $158.5 billion analysts expected.

  • The low end of that range would be Amazon’s slowest growth since it went public in 1997.
  • Amazon told CNBC it expects an “unusually large, unfavorable impact” from foreign exchange rates totaling $2.1 billion, or 1.5%. However, even excluding FX effects, the company would still fall short of expectations, signaling broader challenges ahead.

Now the good news: Despite the headwinds, there’s plenty to be bullish about.

Our take: While Amazon isn’t the first retailer to issue cautious guidance, it’s certainly the most significant. When the industry’s biggest player sees storm clouds ahead, it raises red flags for a broad swath of companies—suggesting that retail headwinds could be more widespread than expected.

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