Despite rising interest rates and the resurgence of customers in physical stores, the retailer expects robust profits throughout the year
In the latest quarter, Amazon witnessed profits nearly tripling, fueled by sustained high consumer spending, despite notable increases in interest rates. The global retail giant foresees robust sales growth for the remainder of the year, although initial growth was affected by escalating prices and a resurgence of customers in physical stores.
For the three months ending September 30, the group’s revenue surged by 13% to $143.1 billion, surpassing Wall Street’s expectations. Profits reached $9.9 billion, a substantial increase from the $2.9 billion reported a year ago.
Beyond its recognition as the world’s largest retailer, Amazon has expanded its extensive digital ecosystem beyond e-commerce, encompassing a diverse range of products and services such as smart speakers, sports broadcasting, and its dominant position in the lucrative cloud computing sector through Amazon Web Services (AWS).
Two years into his role as CEO, succeeding founder Jeff Bezos, Andy Jassy highlighted significant progress in Amazon’s retail division this summer. He specifically pointed out the exceptional success of dividing Amazon’s US fulfillment network into eight distinct regions, surpassing their optimistic projections.
Amazon’s shares have surged nearly 40% this year, marking a recovery from the tech industry’s downturn last year. In after-hours trading, the company’s stock witnessed a 3.6% increase, currently boasting a market capitalization exceeding $1.2 trillion.
While online shopping thrived during the peak of the pandemic, Amazon’s primary retail segment faced challenges due to the highest inflation in a generation, impacting its customer base. Responding to investor demands for cost reductions and a stronger focus on profitability, the company implemented layoffs, affecting 27,000 employees.
For the current quarter, Amazon foresees total net sales ranging from $160 billion to $167 billion, indicating a potential increase of up to 12% compared to the previous year.
Amazon’s workforce, significantly expanded in response to the COVID-19 outbreak through a global hiring initiative, peaked at 1.62 million employees at the beginning of last year and has since decreased to 1.5 million.
In the spring of last year, employees in Staten Island, New York, successfully established the first union in an Amazon US warehouse following a highly competitive campaign. This development raised expectations for similar unions in other locations, although efforts in that direction have yet to produce results.
In the preceding month, the Federal Trade Commission, along with 17 state attorneys general, initiated a lawsuit against Amazon. They alleged that the company had exploited its marketplace influence to increase prices on other platforms, overcharge sellers, and impede competition. Amazon contested the lawsuit, describing it as misguided and cautioning that it could have adverse effects on consumers by leading to higher prices and delayed deliveries.