new York – The return of the world to near normal has slowed Amazon’s pandemic sales surge.
Thursday’s online giant posted higher-than-expected second-quarter profits. However, the outlook for the quarter was disappointing, with lower-than-expected sales results.
Amazon said third-quarter revenues ranged from $ 106 billion to $ 112 billion. Analysts were looking for $ 119.3 billion.
Seattle-based Amazon.com Inc. Stocks fell more than 7% in subsequent aftermarket trading.
Amazon is one of the few retailers that thrived during the pandemic. When physical stores selling non-essential items such as clothing were temporarily or permanently closed, people stuck at home turned to Amazon for everything from groceries to cleaning supplies.
Chief Financial Officer Brian Olsavsky said the slowdown in sales growth was the result of countering the huge COVID-19 shopping bing caused by last year’s pandemic. He added that the slowdown also reflects that people in Europe and the United States in particular are more mobile and do more than online shopping.
When the pandemic hits and blockades began in March 2020, it took some time for Amazon to add more workers and expand its capabilities to accommodate the surge in shopping. By May 2020, the company’s revenue growth jumped from 20% to 21% before the pandemic to 35% to 40%. It maintained this level until the first quarter of this year, when revenue growth reached 41%.
With the exception of the annual Prime Day event in June of this year, Amazon’s year-over-year growth fell in its mid-teens. Earnings guidance for the quarter forecasts growth in the range of 10% to 16%. Amazon executives say a more accurate way to assess its growth rate is a two-year compound annual rate, which remains high at 25% to 30%.
Orsavsky told reporters that the increase in coronavirus infections associated with the delta mutation has encouraged the company to vaccinate more workers. We also cooperate with local governments on safety measures. He said that even if vaccinated, it might mean requiring workers to wear masks in some areas.
“The bigger goal is to counteract this, vaccinate people and bring them back to life successfully,” Orsavsky said.
For the three months ending June 30, the company reported a profit of $ 7.78 billion, or $ 15.12 per share, compared to $ 5.24 billion, or $ 10.30 per share, in the year-ago quarter. Revenue increased 27% to $ 113.08 billion.
Analysts surveyed by FactSet expect quarterly earnings to average $ 115.42 billion and earnings per share of $ 12.28.
In addition to online shopping, Amazon’s other businesses have expanded. Sales in the cloud computing business, which enhances online operations for Netflix, McDonald’s and other companies, increased 37% in the quarter. Also, in units that include an advertising business, sales increased 87%, while the brand paid to display the product first when shoppers searched the site.
Amazon didn’t want to get in the way of the Tokyo Olympics, so it held Prime Day from June 21st to June 22nd. Last year, Amazon postponed Prime Day to October for a pandemic and used it to start holiday shopping early.
The quarter ending June 30 was the last quarter when founder Jeff Bezos became CEO. He resigned in early July and became chairman. Andrew Jassie, who headed Amazon Web Services, a cloud computing unit, succeeded him.
Amazon continues to add more businesses to the empire, despite regulators around the world scrutinizing Amazon’s business practices.
In May, Amazon announced that it would acquire MGM, Legally Blonde and Shark Tank, the movie and television studios behind James Bond, with the goal of filling video streaming services with more viewing material.
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Amazon’s sales growth slows as pandemic shopping surges ease
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