Customers are shopping offline again
Amazon presents disappointing figures
With rising inflation, the pandemic is decreasing in several countries. Both developments are putting pressure on Amazon. Rising costs and declining online shopping mean mail order orders are experiencing the weakest growth in over two decades.
Amazon faced headwinds in the first quarter. After the pandemic subsides, customers are no longer shopping online regularly, and high inflation is also having a curbing effect. The online retailer had its weakest quarter in over two decades with growth of 7%. Analysts had expected a 7.4% increase in sales. However, the profit drivers were once again the cloud computing business. For the current quarter, however, the e-commerce giant expects a further decline in operating profit.
Amazon posted revenue of $ 116.4 billion for the first quarter. It was nearly as much as analysts expected at $ 116.5 billion. The US group had announced net sales of between 112 and 117 billion dollars. Operationally, profits plummeted to $ 3.7 billion, according to more information. Between $ 3 and $ 6 billion were announced, up from $ 8.9 billion in the first quarter of 2021.
On balance, Amazon.com posted a $ 3.8 billion loss, down from a $ 8.1 billion profit a year ago. The loss per share was $ 7.56 after a profit of $ 15.79. Analysts had expected earnings per share to average $ 8.35. As the result was significantly weaker than expected, the stock price plunged more than 10 percent in after-hour trading in a first reaction in the US. Amazon cited a $ 7.6 billion loss due to valuation losses on its stake in electric car maker Rivian.
Prime membership fees have increased
But Amazon is also struggling with rising costs on several fronts. To operationally react to rising costs, Amazon has raised its Prime subscription rates for the first time since 2018, offering customers more services such as free delivery.
The Amazon Web Services (AWS) cloud division continued to be Amazon’s largest contributor during the quarter. The group reported AWS operating income of $ 6.5 billion – operating income for this division alone significantly exceeded group-wide operating income and offset losses in other areas. Revenue for AWS, which leases compute, storage and networking capacity to users, increased to $ 18.4 billion in the first quarter (prior year: $ 13.5 billion).
Amazon’s e-commerce business has made many more sales but has not been profitable, especially outside the United States. Amazon reported an operating loss of $ 1.6 billion on US sales of $ 69.2 billion. In international business, the operating loss was $ 1.3 billion.
For the second quarter, Amazon expects operating income of between minus 1 and plus $ 3 billion, compared to plus $ 7.7 billion in the first quarter of 2021. The group sees net revenues of between $ 116 and $ 121 billion, with an increase of 3 to 7 percent.