Amazon results and outlook fall short as warehouse, fuel costs soar

Amazon’s forecast shows hiking the price of its fast-shipping club Prime last quarter may not be enough to prop up its profit.

Amazon.com Inc delivered a disappointing quarter and outlook on Thursday as the e-commerce giant was swamped by higher costs to run its warehouses and deliver packages to customers.

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Shares fell 12% in after-hours trade.

After a long-running surge in sales during the COVID-19 pandemic, Amazon is facing a litany of challenges. The company's expenses swelled as it offered higher pay to attract workers. Afulfillment center in New York City voted to create Amazon'sfirst U.S. union, a result the retailer is contesting. And higher fuel prices are beginning to eat into consumers' disposable income while making delivery more expensive for Amazon, the world's biggest online retailer.

Amazon's forecast shows hiking the price of its fast-shipping club Prime last quarter may not be enough to prop up its profit. The company expects to lose as much as $1 billion in operating income this quarter, or make as much as $3 billion. That's down from an operating income of $7.7 billion in the same period last year.

"This was a tough quarter for Amazon with trends across every key area of the business heading in the wrong direction and a weak outlook for Q2," said Insider Intelligence principal analyst Andrew Lipsman.

Still, there were bright spots, like Amazon Web Services, the division that new CEO Andy Jassy ran before taking the company's top job last year. The unit increased revenue 37% to $18.4 billion, slightly ahead of analysts' estimates.