Amazon feeling first pinch of holiday economic slump

Amazon feeling first pinch of holiday economic slump

Summary: The uncertainty surrounding the economy is starting to impact brand names that have become synonymous with online holiday shopping - notably Amazon. Lazard Capital analyst Colin Sebastian lowered estimates for Amazon's Q3, FY 2008 and FY 2009 this morning, noting in an investor's report that, despite its gains in e-commerce market share, it is not immune to the current slowdown.

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The uncertainty surrounding the economy is starting to impact brand names that have become synonymous with online holiday shopping - notably Amazon. Lazard Capital analyst Colin Sebastian lowered estimates for Amazon's Q3, FY 2008 and FY 2009 this morning, noting in an investor's report that, despite its gains in e-commerce market share, it is not immune to the current slowdown.

Q3 revenue and EPS estimates were lowered to $4.27 billion and 25 cents from $4.3 billion and 27 cents. FY 2008 estimates were lowered to $19.70 billion and $1.55 eps from $19.75 billion and $1.58 eps. FY 2009 estimates were lowered from $24.50 billion and $2.15 eps to $24.75 billion and $2.18 eps. From the investor's note:

According to our most recent channel checks, online spending trends remain challenging, and may have weakened further since the end of August... According to a survey from online payment services provider eBillme, nearly half of consumers are delaying purchases due to uncertainty in the economy, while 42% are planning to decrease their usage of credit cards. In addition, we believe there could be more competitive and promotional pressures at retail ahead of the holidays, beginning earlier than usual in the fall. On the positive side, we continue to believe that e-commerce growth should outpace bricks-and-mortar retail as consumers seek better values online and are now more accustomed to shopping online for the holidays.

Topics: E-Commerce, Amazon, Browser

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  • Online spending.

    Thank you for covering the index, our next release will be late Oct and will be released in time for Cyber Monday and the holiday season

    Interesting times for sure, while it is true that access to credit is shrinking and the desire to use it is also shrinking especially among women. People still want to purchase, especially online. Gas prices for example have an impact, instead of driving, shop online for that deal, and get free shipping, while saving gas, seems perfect. Further 32% of consumers indicated they will spend more if they can do so with cash online. This indicates that customers just want the ability to manage their fiances while continuing to spend.

    There are some online retailers who will do well still, especially those who are selling non-essentials like Walmart. Amazon should fair well, I believe they have a market place with good variety in offering, recent data from Forrester research puts them in a growth position online. Overall as Forrester and others suggested, online will see growth this year, be it at a lower rate than it had previously

    Samer Forzley
    VP Marketing, eBillme
    sforzley