Amazon.com Inc (AMZN.O), one of the pandemic’s biggest winners, reported record profits on Thursday, indicating that customers will continue to spend in rising the US economy, and that online shoppers are unlikely to quit.
Since the outbreak of the coronavirus in February 2020, shoppers have increasingly turned to Amazon for delivery of household essentials, and Amazon expects this trend to continue post-pandemic, especially for groceries.
Despite the closure of brick-and-mortar stores, Amazon has now recorded four consecutive quarters of record profits, drawn more than 200 million Prime loyalty customers, and hired over 500,000 employees to meet rising demand.
Amazon expects operating profits for the current quarter to range between $4.5 billion and $8 billion, including around $1.5 billion in COVID-19 costs. After-hours trading saw shares rise 4%.
Throughout the pandemic, Amazon has been at the forefront of labour unrest, with a failed effort by organised labour to unionise an Amazon warehouse in Alabama and legal action in New York about putting company profits ahead of employee protection.
The advances have had little effect on Amazon’s market. Amazon benefited from an increase in Prime subscriptions, customers’ acceptance of grocery delivery amid COVID-19, and an improving economy, according to Michael Pachter, an analyst at Wedbush Securities.
“It’s a habit. Good grocery store. Checks for stimuli”, Pachter said. “They’re going to be successful.” Slower revenue growth in the current quarter compared to the previous quarter represented a more difficult contrast to the previous year, when lockdowns were in full swing, according to Pachter.
“In just 15 years, AWS has grown to become a $54 billion annual revenue run rate business competing against the world’s largest technology firms, and its growth is growing,” said CEO Jeff Bezos in a press release about the company’s cloud computing unit Amazon Web Services (AWS).
The accolades were a nod to Andy Jassy, Amazon’s long-time cloud chief who will take over as CEO this summer from Jeff Bezos. According to the IBES data from Refinitiv, Amazon announced a contract for Dish Network Corp (DISH.O) to develop its 5G network on AWS last week, and the division increased sales 32 percent to $13.5 billion, beating analysts’ average estimate of $13.2 billion.
Businesses are constantly in need to outsource their technology infrastructure to AWS, according to Brian Olsavsky, Amazon’s chief financial officer. “As we step through the post-pandemic recovery,” he said, “we expect the same pattern to continue.”
Prime Day, Amazon’s annual marketing blitz, will boost sales in the second quarter. The event will be held in June rather than July, as is customary, in order to meet consumers before they go on holiday.
Amazon’s affiliate Whole Foods Market continues to be a bright spot for grocery sales. Grocery was “a great revelation during the post-pandemic era,” according to Olsavsky.
The company’s first-quarter profit more than tripled from a year earlier, to $8.1 billion, on $108.5 billion in revenue, exceeding analysts’ expectations.
