So, you thought Amazon was raking it in amid the pandemic? But profits are down 29 pc
Amazon's sales soared in the first 90 days of the year, as more home-bound persons shopped online amid the coronavirus pandemic.
But getting an incredible number of packages to shopper's doorsteps is expensive. The rising costs pushed Amazon's first-quarter profit down 29% and its earnings missed Wall Street expectations. Amazon shares slipped about 5% in after-hours trading Thursday.
And CEO and founder Jeff Bezos says Amazon will spend more.
Bezos said he expects the business to spend $4 billion “as well as perhaps somewhat more'' in the next quarter. That money will head to pay workers overtime, to buy masks or other safety protection for them and disinfect Amazon's vast warehouses where orders are packed and shipped.
Still, the business is in better financial position than most traditional retailers. Macy's, Kohl's and Gap temporarily closed their stores, losing a lot of their sales. They also have stopped paying their employees.
Amazon, whose reputation is made on speedy deliveries, has struggled to maintain with the surge in orders. Deliveries that took two days or less is now able to have a week or longer. In fact it is sold out of several the products people need, like wc paper and disinfectant sprays.
The problem, Amazon said, is that it can't get products into its warehouses and out again fast enough. The business doesn't know when delivery times will return to normal.
“Right now, things remain so up in the air that I can't really project when that day will be,” said Brian Olsavsky, Amazon's chief financial officer.
It has hired 175,000 persons to try to keep up with the rush of orders and is paying workers an extra $2 one hour. But many have stayed home, worried they could contract the virus at the warehouse where thousands of folks work. Some have protested what they said were unsafe conditions.
In France, a court closed all six Amazon warehouses, saying that the company didn't do enough to protect workers. Amazon has said it provides personnel with face masks, has been checking temperatures and keeps staff apart.
Overall, the Seattle-based company reported net gain of $2.54 billion in the first quarter, weighed against $3.56 billion a year ago. Earnings per share came to $5.01, below the $6.23 analysts expected, according to FactSet.
Revenue rose 26% to $75.45 billion, beating the $73.7 billion analysts expected.
Outside of online shopping, Amazon's other businesses also grew. Revenue at its cloud computing business, which helps powers video streaming site Netflix and other companies, rose 33%.
At Whole Foods, earnings rose 8%. Amazon said a lot of the sales increase happened in March, when shoppers headed to Whole Foods to fill up on groceries as a result of pandemic.
Its total workforce topped 840,000 towards the end of March, adding more than 42,000 employees because the end of last year. Amazon.com Inc. is the second-largest U.S.-based employer behind Walmart.
Source: www.deccanchronicle.com
