Online retailer – Quarterly loss for Amazon – Economy

Amazon reports a net quarterly loss for the first time in almost seven years. The group posted a minus of 3.8 billion dollars. Overall, this means a decline in operating profit within the year from 8.9 to 3.7 billion dollars.

The main reason for the poor past quarter is a $7.6 billion write-down on Amazon’s stake in electric car maker Rivian. Shares in Tesla’s rival fell more than 50 percent in the first quarter of 2022. But even apart from that, current developments are causing problems for the world’s largest online retailer, such as rising costs for higher wages and fuel. In view of the global economy, fierce competition and rising costs, Amazon was also more cautious than expected for the current quarter. The share has since lost up to 12 percent.

In the past quarter, Amazon’s currency-adjusted sales increased by around nine percent to $116.4 billion, slightly more than expected. For the current quarter, however, the group fell well short of the forecasts of analysts, who expect an average of 125.48 billion, with a range between 116 and 121 billion.

Operating profit is expected to range from a $1 billion loss to a $3 billion profit. A year ago there was still a plus of 7.7 billion dollars.

One reason for the development is the higher cost of running Amazon’s warehouses. Amazon has tried to lure employees with higher wages, but even then it has not been able to fill all the positions in the warehouse. In addition, the group is struggling with the consequences of higher fuel prices, which have a double effect: they reduce the disposable income of consumers and make deliveries for Amazon more expensive. The group reacted to this, among other things, with higher fees for its Prime fast shipping service.

In addition, starting this week, a fuel and inflation surcharge averaging five percent will be introduced for merchants who use Amazon’s warehousing services in the United States. However, the forecasts for the current quarter show that these measures may not be enough to offset the cost increases. Amazon boss Andy Jassy said on Thursday that the group also had to work on improving its productivity.

But there was also a ray of hope in the past quarter: The Amazon Web Services (AWS) division increased its sales by 37 percent to $18.4 billion, which was slightly better than expected.

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