Amazon growth continued to fall from pandemic highs, company Said on thursdayWhen online shopping is reset in a turbulent economy, it shows a new normal.
Amazon reported revenue of $ 121.2 billion in the three months to June 30, an increase of 7.2% over the previous year. This was the slowest growth in more than 20 years, down slightly from 7.3% in the previous quarter.
Amazon lost $ 2 billion from its $ 7.8 billion profit last year. The loss includes a $ 3.9 billion drop in the market value of electric truck maker’s investment in Rivian Automotive, whose shares have declined since it went public last fall. In addition, the strong US dollar reduced sales by $ 3.6 billion, exceeding the company’s expectations.
Amazon’s growth was particularly modest compared to last year’s second quarter, when growth surged 27%. At that time, vaccines were still in the early stages of distribution, and federal stimulus measures boosted consumer spending. The company’s annual Prime Day Deal event, which Morgan Stanley estimated to generate $ 4.6 billion in revenue this year, took place in the second quarter of last year, but has moved to the third quarter of this year.
However, the results were better than Amazon expected, with its share rising over 12 percent in overtime trading.
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Expected to be worried. With sustained high inflation, rising consumer prices and falling spending, the US economy is showing clear signs of a slowdown, fueling concerns about a potential recession. The other eight workarounds that indicate the above problem are:
Amazon CEO Andy Jassy said in a statement, “Despite continued inflationary pressures on fuel, energy and transportation costs, we have made progress at more controllable costs as we saw last quarter. And especially the productivity of fulfillment networks is improving. “
Amazon said it expects sales to grow 13-17% this quarter and operating profit to remain below the same period last year.
Some retailers say they are experiencing change as pandemics are almost certainly suppressed in uncertain economic conditions. On Monday, Wal-Mart told investors to expect lower profits as consumers responded to inflation by reducing discretionary purchases and focusing more on less profitable groceries.
On Tuesday, Shopify, an online service for small and medium-sized retailers, announced that it would dismiss 10% of its employees. At the start of the pandemic, e-commerce thought it would “leap forever, even for five or ten years,” but instead online sales activity “returned to the approximate location suggested by pre-Covid data.” Said. This point. “
Brian Olsavsky, Amazon’s chief financial officer, said in a call to reporters that inflation did not appear to affect customer behavior.
“We haven’t seen anything yet,” he said. “Demand increased during the quarter and June was very strong.” He said consumers were responsive to the fact that Amazon had fewer out-of-stock items and could deliver faster. Shown.
Jassy, who took over as CEO a year ago, said costs to reduce the overexpansion of the vast network of warehouses and other operational infrastructure that the company uses to process and serve customer orders. Is called “a very big focus”. ..
According to MWPVL International, a consulting firm that closely tracks Amazon’s operations, Amazon has closed, canceled or postponed the opening of more than 35 warehouses nationwide.
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The company hired 1.52 million people in the second quarter, about 100,000 less than at the end of March.
Olsavsky said Amazon expects to see more financial savings later this year as efficiency grows.
Some of the more profitable parts of Amazon’s business have shown better performance. Subscription revenue increased 14% to $ 8.7 billion, excluding currency changes, due to higher Amazon prices. Previously announced This year’s Prime membership program began rolling through US customer accounts when the annual subscription was renewed.The company has a prime membership price this week gain Virtually even in Europe.
Amazon’s advertising increased 21% to $ 8.8 billion, excluding currency fluctuations, while the slump in advertising hit other tech companies. Amazon’s ads are very “transactional” and are visible to aggressive customers, which tends to improve performance during a recession, Orsavsky said.
Amazon Web Services, the cloud computing division, grew 33% to $ 19.7 billion. It remained an imbalanced impetus for profits. It generated 16% of sales, but generated a profit of $ 5.7 billion. In contrast, Amazon’s retail business lost $ 2.4 billion.
