Amazon falls, projects slower growth as online sales stagnate

(Bloomberg) – Amazon.com Inc. forecast sluggish sales growth in the second quarter as consumers cut back on online spending amid rising inflation and a return to pre-pandemic business. Shares plunged about 10% in extended trading.

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Revenue will be $116 billion to $121 billion for the period ending in June, Amazon said in a statement Thursday. Analysts estimated an average of $125 billion, according to data compiled by Bloomberg.

Amazon has been grappling with higher energy and labor costs and changing shopping habits since its online store became essential for consumers during the pandemic. First-quarter revenue from the main e-commerce business fell 3% from a year earlier. Those sales had jumped 44% in the same period of 2021 as the delta variant of Covid-19 spread across the United States.

“It was a tough quarter for Amazon with trends in all key areas of the business going in the wrong direction and a weak outlook for the second quarter,” said Insider Intelligence senior analyst Andrew Lipsman. “The difficulties start with the trade sector, which could not reverse the slowdown in growth of the last quarters and even turned negative.”

Wall Street analysts were nearly unanimous in their optimism about Amazon’s prospects, citing the company’s massive investments in package processing and delivery capacity and the continued growth of its cloud computing and highly advertising businesses. profitable. But chief financial officer Brian Olsavsky said the company’s rapid expansion had left it with too much warehouse capacity and too many workers, which will take some time to grow.

Still, Olsavsky resisted the idea of ​​consumers opting out of online shopping. Demand “remains strong”, he said in a briefing with reporters. “Customer-facing metrics all look good.”

Rising prices, ongoing supply chain issues and increased capacity built to handle the crush during the pandemic have contributed to higher costs. Amazon reported total operating expenses of $112.7 billion, including $20.3 billion in fulfillment costs in the quarter ended March 31. The company on Thursday began rolling out a 5% fee charged to independent sellers on its website who use its shipping services, a move the impact of inflation and rising fuel prices.

“The pandemic and subsequent war in Ukraine has brought about unusual growth and challenges,” chief executive Andy Jassy said in the statement. “Because we are no longer looking for physical capacity or staffing, our teams are focused squarely on improving productivity and profitability across our fulfillment network. We know how to do this and we have done it before. This may take some time, especially as we deal with inflationary and supply chain pressures. »

Sales rose 7.3% to $116.4 billion, in line with analyst estimates. This is the slowest pace of growth since 2001, and the first time Amazon has recorded consecutive quarters of less than 10% revenue growth. Unit sales, a measure that excludes cloud contracts and groceries at Amazon-owned Whole Foods Market, were flat from a year earlier, also a first for Amazon.

Amazon Web Services, the cloud unit, reported revenue of $18.4 billion, up 37%. Ad sales increased 23% to $7.88 billion.

The company also reported a net loss of $3.8 billion, or $7.56 per share, compared to earnings of $8.1 billion, or $15.79 per share, during the reporting period. ‘last year. Amazon said it included a $7.6 billion loss in nonoperating expenses related to its investment in Rivian Automotive Inc. It was the company’s first net loss in seven years.

The shares fell to a low of $2,560 in extended trading, after closing at $2,891.93 in New York. The stock has fallen 13% this year amid a steep decline in the S&P 500.

(Updates with analyst comments in fourth paragraph.)

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