Yesterday, Amazon reported its first-quarter earnings. The online giant’s sales topped consensus expectations and grew over last year. A surge in consumer demand, following the outbreak of Covid-19, saw Amazon announce revenues of $75.5bn in the first three months of the year, equating to over $33m an hour.
The company also benefitted from a $10.3bn boost from Amazon Web Services, its web hosting service, which counts Netflix among its clients as well as the World Health Organisation.
However, in spite of the huge growth reported in first-quarter revenue, Amazon’s shares have sunk about five per cent in after-hours trading. This is because although there was a boom in sales – 26 per cent higher than the same time last year – profit fell 29 per cent from a year earlier to $2.5bn. And the company has said that it plans to spend a further $4bn or more in the next three months on coronavirus-related expenses.
Jeff Bezos, Amazon’s founder and CEO, said: “From online shopping to Amazon Web Services to Prime Video and Fire TV, the current crisis is demonstrating the adaptability and durability of Amazon’s business as never before, but it’s also the hardest time we’ve ever faced.
“We are inspired by all the essential workers we see doing their jobs — nurses and doctors, grocery store cashiers, police officers, and our own extraordinary front-line employees. The service we provide has never been more critical, and the people doing the front-line work — our employees and all the contractors throughout our supply chain — are counting on us to keep them safe as they do that work. We’re not going to let them down.
“Providing for customers and protecting employees as this crisis continues for more months is going to take skill, humility, invention, and money. If you’re a share-owner in Amazon, you may want to take a seat, because we’re not thinking small.
“Under normal circumstances, in this coming Q2, we’d expect to make some $4bn or more in operating profit. But these aren’t normal circumstances. Instead, we expect to spend the entirety of that $4 bn, and perhaps a bit more, on Covid-related expenses, getting products to customers and keeping employees safe.”
The mixed results show how the coronavirus outbreak is leading to more shoppers on Amazon, albeit at an increased cost. Amazon is dealing with a number of costly changes, including supply chain lockdowns, warehouse safety upgrades, and pay raises across its warehouses.
And, while many retailers are laying people off, Amazon is hiring 75,000 more warehouse and delivery drivers, after having added 100,000 new employees since March.
While Amazon’s soaring sales have boosted its fortunes, workers at Amazon warehouses and its Whole Foods supermarket chain have protested that the company has not done enough to protect them from the coronavirus.
