In the face of inflation at a four-decade high, Amazon on Thursday posted its slowest quarterly growth in years.
The company reported $116.4 billion in revenue for the first three months of the year, up 7% from a year earlier. This is down from 44% sales growth in the first quarter of 2021. The number of products Amazon sold this quarter was flat from a year ago, and the cost to sell those items was also. increase.
Amazon posted a $3.8 billion loss this quarter, its first loss since 2015. The loss included a $7.6 billion drop in its investment in Rivian Automotive, a truck maker. electricity whose stock has fallen this year. The loss also stemmed from Amazon’s consumer businesses in North America and internationally, although its cloud services division continued to grow and make money.
The results fell far short of Wall Street expectations, sending Amazon’s stock price down more than 10% in after-hours trading.
Andy Jassy, the company’s chief executive officer, said in a statement: “Our teams have always been focused on improving productivity and cost-effectiveness across our entire fulfillment network. . “We know how to do this and have done it before. This could take some time, especially as we face ongoing supply chain and inflationary pressures.”
The company’s forecast for the current quarter of a 3% to 7% increase in sales suggests its growth rate may continue to slow.
Amazon benefits from the coronavirus pandemic as people flock to online shopping. But as vaccines have become ubiquitous and as inflation hit 8.5% in March, shoppers have become more indulgent. According to Commerce Department data released on Thursday, consumer spending on the types of nondescript products people typically buy on Amazon fell in the first quarter.
Faced with rising costs, Amazon has raised prices for customers and sellers in its marketplace. The price of its Prime membership program rose in February to $139, from $119, the first increase since 2018. This month, the company announced a “fuel and inflation” supplement for sellers who have inventory and ship to customers.
At one point in mid-March, Amazon forced employees at some of its warehouses to take mandatory unpaid leave because customer demand was so weak.
Labor shortages have also cost Amazon billions of dollars recently as it responded by raising wages and offering other incentives. The company barely increased its workforce during the quarter, with a total of 1.62 million employees.
The company also faces an increase in employee activity. In April, workers at a Staten Island warehouse voted the first Amazon facility in North America to unionize.
Some investors are optimistic that costs will gradually decrease. Amazon has spent heavily to expand its own warehousing infrastructure, including opening delivery depots across the country, allowing its network of contractors to quickly deliver packages to homes. everyone.