The world’s return to near-normality slows the surge in sales induced by the Amazon pandemic
The online giant posted better-than-expected second-quarter earnings on Thursday. But it delivered sales results below expectations and offered a disappointing outlook for the current quarter.
Amazon said revenue would be in the range of $ 106 billion to $ 112 billion for the third quarter. Analysts were looking for $ 119.3 billion.
Shares of Seattle-based Amazon.com Inc. fell more than 7% in aftermarket trading.
Amazon is one of the few retailers to have thrived during the pandemic. As physical stores selling non-essentials like clothing have closed temporarily or permanently, people stuck at home have turned to Amazon for everything from groceries to cleaning supplies.
CFO Brian Olsavsky said the slowing sales growth is the result of the company breaking in against the huge COVID-19 buying spree induced by last year’s pandemic. The slowdown also reflects that people, especially in Europe and the United States, are more mobile and do things other than online shopping, he added.
When the pandemic hit and closures began in March 2020, it took some time for Amazon to add more workers and expand its ability to cope with increased purchases. In May 2020, the company’s revenue growth rate jumped from 35% to 40%, from 20% to 21% during the pre-pandemic days. It remained at this level until the first quarter of this year, when its revenue growth reached 41%.
With the exception of its annual Prime Day event, which was held in June this year, Amazon’s year-over-year percentage growth rate plummeted until mid-teens. Its revenue forecast for the current quarter now calls for growth of 10-16%. Amazon executives say a more accurate way to gauge its growth rate is to use a two-year compound annual rate, which remains between 25 and 30 percent.
“The main objective is to eliminate this, to get people vaccinated and to have a successful return to life,” Olsavsky said.
In the three-month period ended June 30, the company reported earnings of $ 7.78 billion, or $ 15.12 per share, compared to $ 5.24 billion, or $ 10.30 per share. , during the period of the previous year. Revenue jumped 27% to $ 113.08 billion.
Analysts polled by FactSet on average expected $ 115.42 billion in quarterly revenue and earnings per share of $ 12.28.
Besides online shopping, Amazon’s other business has also grown. Sales of its cloud computing business, which helps power the online operations of Netflix, McDonald’s and other companies, increased 37% in the quarter. And in his unit which includes his advertising business, where brands pay to have their products appear first when shoppers search the site, sales are up 87%.
Amazon hosted its Prime Day June 21-22, the first to host the sales event because it wanted no distractions from the Tokyo Olympics. Last year, Amazon postponed Prime Day to October due to the pandemic and used it to kickstart holiday shopping earlier.
The quarter that ended on June 30 was the company’s last with founder Jeff Bezos as CEO. He resigned to become executive chairman in early July. Andrew Jassy, who headed his cloud computing unit, Amazon Web Services, succeeded him.
Amazon continues to add more companies to its empire even as regulators around the world scrutinize the company’s business practices.
In May, Amazon announced that it was buying MGM, the film and television studio behind James Bond, “Legally Blonde” and “Shark Tank,” in an effort to fill its video streaming service with more material to watch.
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