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Amazon sales growth slows at the beginning of Jacey’s CEO term

File Photo: The Amazon logo can be seen at the company’s Logistics Center in Beauve, France, on August 8, 2018. REUTERS / PascalRossignol / File Photo

July 30, 2021

Jeffrey Dustin and Nivedita Bar

(Reuters)-Amazon.com Inc said Thursday that sales growth would slow in the coming quarters as customers go out of the house.

The company said spending growth by Amazon.com’s most valuable customer, Prime members, has also eased. In off-hours transactions, stock prices fell 7%.

More than a year after the COVID-19 pandemic, Amazon’s financial luster has faded slightly. When the physical store closed, Amazon made record profits, attracted more than 200 million prime loyalty subscribers, and hired more than 500,000 workers to meet the surge in demand.

Today, the company faces the daunting task of climbing even higher. According to Amazon, sales surged 44% in the first quarter of this year, but fell to 27% by June 30th. Third-quarter sales could be only 16%.

Brian Orsavsky, Amazon’s chief financial officer, said this was because it was difficult to compare to last year, when consumers stayed more indoors and relied on e-commerce for their daily needs. In the US and Europe, customers are now out.

They are “doing more than shopping,” he said.

According to Refinitiv’s IBES data, second-quarter revenue was $ 113 billion, below analysts’ average estimate of $ 115 billion. Profit increased 48% to $ 7.8 billion, the second largest amount Amazon has ever announced.

Amazon expects this low growth to continue in the coming quarters, Orsavsky told reporters.

The outlook comes shortly after Jassy took over Amazon’s top job on July 5th. It’s never been bigger and more complicated than ever. Amazon announced a deal to buy movie studio MGM for $ 8.5 billion last quarter. It operates a grocery chain, builds a healthcare business, faces regulatory scrutiny around the world, and at the same time expands in Hollywood.

Orsavsky said the company hopes that COVID-19 will subside and the economy will continue to recover. Competitors Alphabet Inc and Facebook Inc have said workers returning to the office will need vaccines, but Amazon hasn’t made such an announcement.

The pandemic company has been working at a facility in Bessemer, Alabama, to protest staff over safety measures and a failed union bid that attracted attention.

Brian Yarbro, an analyst at Edward Jones, said it was “impossible” for Amazon to maintain a rapid pitch.

“Given the size of the business, it’s still tremendous growth,” he said. “Obviously the pandemic helped them, but they wouldn’t be able to grow it rapidly over those numbers.”

Labor shortage

The world’s largest online retailer has moved its annual marketing blitz, Prime Day, to June, hoping shoppers to sell their products before they go on vacation. Orsavsky told analysts that sales since May 15 have only grown in the mid-teens, except for Prime Day.

Amazon Web Services is much better. Jassy’s long-running cloud computing revenue increased 37% to $ 14.8 billion, above an estimated $ 14.1 billion. AWS has cut prices, but Olsavsky says it has signed a new multi-year deal with a large customer.

Amazon size poses a major challenge.

Costs continue to rise, except for the $ 200 million additional inventory that Amazon plans to pay Jasie over the next decade. The company provided an average hourly wage of $ 17 and a contract to attract 75,000 workers during a labor shortage.

Wage pressure is expected to continue in the near future as industry reopening, government payments and the new semester affect individuals’ motivation to work, Orsavsky said.

“It’s a very competitive labor market out there, and it’s certainly the biggest source of inflationary pressure we see in our business,” he said.

This winter, a second US employer wanted to become a rallying point for organized labor and form Amazon’s first US union to encourage similar efforts across the country. Amazon is waiting for the US National Labor Relations Board’s regional director to decide whether to overturn the overwhelming victory in the union elections in Bessemer, Alabama, and demand a rerun.

Following the April vote, Bezos said he was aiming to make Amazon a better place to work. It is unclear how he will govern from bystanders in the role of executive chairman of Amazon’s board of directors.

Mr. Orsavsky said Bezos “stepped into the ground” while Mr. Bezos continued to consider irreversible decisions.

“We made a good takeover,” Orsavsky said. But Bezos said, “I’m not going to leave. He’s clearly very much involved.”

(Report by Jeffrey Dastin in San Francisco and Nivedita Baru in Bangalore, additional report by Daniel Kay, edited by Maju Samuel and Lisa Shoemaker)



Amazon sales growth slows at the beginning of Jacey’s CEO term

Source link Amazon sales growth slows at the beginning of Jacey’s CEO term

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