Amazon sales growth slows in tame start to Jassy’s tenure as CEO
Manjil Das, INN/Chennai
After 27 years under Jeff Bezos’ leadership, Amazon.com predicted sales growth would moderate in the following several quarters as customers ventured outside the home.
Amazon.com’s most valued consumers, have also seen their spending growth slow, the firm reported. After-hours trading saw a 7 percent drop in the stock price.
Amazon’s financial shine is dimming after more than a year of the COVID-19 epidemic. To keep up with demand, Amazon hired over 500,000 people to fill the gap left by the closure of brick-and-mortar businesses.
Now, the firm must continue to climb. This year’s first quarter revenue was up 44 percent; at the end of the second quarter, it was down 27 percent. Amazon says third-quarter sales might climb by as little as 16 percent.
Mr. Olsavsky, Amazon’s chief financial officer, ascribed the decline to the fact that consumers remained indoors more last year and depended on e-commerce for their everyday needs. Consumers in the United States and Europe have begun to leave their homes.
As he put it, “They are doing other things except shopping.”
According to Refinitiv’s IBES statistics, revenue for the second quarter was $113 billion, below the $115 billion average forecast of analysts. This is Amazon’s second-largest profit announcement in history, up 48 percent to $7.8 billion.
This slower growth rate is expected to persist in the next quarters, Olsavsky said.
On July 5, Jassy assumed Amazon’s top position, which has never been more challenging or complex. To extend its presence in Hollywood, Amazon said last quarter that it would pay $8.5 billion to acquire the film studio MGM. The company is also ramping up its healthcare sector and is under scrutiny from authorities throughout the world.
“We’re hoping COVID-19 goes away,” Olsavsky added. “We’re hoping the economy continues to improve.” As its competitors Alphabet Inc. and Facebook Inc. have announced, Amazon has not made any similar announcements.
An Alabama facility in the epidemic has seen worker demonstrations about safety procedures, as well as a high-profile unionisation attempt that fell short.
“It is not possible” for Amazon to continue its rapid growth, according to Edward Jones analyst Brian Yarbrough.
Given the sheer scale of the company, he added, “it’s still tremendous growth.” However, they will not be able to grow so fast on top of those numbers, given the impact of the epidemic.