What happened
Shares of Amazon (AMZN 1.49%) were falling today as investors responded to the disappointing financial results from Abercrombie & Fitch. Investors were concerned that some of the problems Abercrombie faced in its first quarter could be widespread across the entire retail sector.
Amazon's stock was down 3.6% as of 3:01 p.m. ET.
So what
Abercrombie reported an unexpected loss in its first quarter and cut its sales outlook for the full year. Management placed the blame on rising costs for products and freight shipping.
Image source: Getty Images.
The company's poor results come after other retailers, including Target and Kohl's, recently reported disappointing results because of rising costs.
In short, Amazon investors were already on edge about the retail industry, and Abercrombie's results proved that nearly every company is feeling the pinch of sky-high inflation, supply chain issues, and increasing freight costs.
Abercrombie's shares tanked 30% following its earnings release, and Amazon's share price moved in sympathy with the massive slump.
Now what
Investors are adding up all of the dismal financial results from other retailers and worry that Amazon will continue to face headwinds of its own. Amazon reported its latest financial results last month, with earnings falling below Wall Street's consensus estimate and revenue outlook below analysts' forecasts.
CEO Andy Jassy said last month that the company is continuing to "work through ongoing inflationary and supply chain pressures." Investors are anticipating that rising costs and a potential slowdown of the U.S. economy will continue to hurt the online retailer.
With another retail stock reporting a difficult quarter, it's getting harder for Amazon investors to stay optimistic.
