financetom
Retail
financetom
/
Retail
/
Amazon profit falls as pandemic-related costs rise
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Amazon profit falls as pandemic-related costs rise
May 1, 2020 2:02 AM

Amazon's sales soared in the first three months of the year, as more home-bound people shopped online amid the coronavirus pandemic.

Share Market Live

NSE

But getting millions of packages to shopper's doorsteps is expensive. The rising costs pushed Amazon's first-quarter profit down 29 percent and its earnings missed Wall Street expectations. Amazon shares slipped about 5 percent in after-hours trading Thursday.

And CEO and founder Jeff Bezos says Amazon will spend more. Bezos said he expects the company to spend 4 billion and perhaps a bit more in the second quarter. That money will go to pay workers overtime, to buy masks or other safety protection for them and to disinfect Amazon's vast warehouses where orders are packed and shipped.

Still, the company is in better financial position than most traditional retailers. Macy's, Kohl's and Gap temporarily closed their stores, losing much of their sales. They have also stopped paying their workers.

Amazon, whose reputation is built on speedy deliveries, has struggled to keep up with the surge in orders. Deliveries that took two days or less can now take a week or longer. And it is sold out of many the products people need, like toilet paper and disinfectant sprays.

The problem, Amazon said, is that it can't get products into its warehouses and out again fast enough. The company doesn't know when delivery times will return to normal.

Right now, things are still 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 people to try to keep up with the rush of orders and is paying workers an extra 2 an hour. But many have stayed home, worried they may contract the virus at the warehouse where thousands of people 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 workers with face masks, has been checking temperatures and keeps workers apart.

Overall, the Seattle-based company reported net income of 2.54 billion in the first quarter, compared with 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 percent 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 percent.

At Whole Foods, revenue rose 8 percent. Amazon said much of the sales increase happened in March, when shoppers headed to Whole Foods to stock up on groceries due to the pandemic.

Its total workforce topped 840,000 at the end of March, adding more than 42,000 employees since the end of last year. Amazon.com Inc. is the second-largest US-based employer behind Walmart.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Copyright 2023-2025 - www.financetom.com All Rights Reserved