Amazon Q1 sales exceed estimates

Amid the corona crisis, the eCommerce giant reports net sales of US$75.5 billion in Q1 2020

As a response to curfews and contact bans, which were introduced in many countries as a consequence of the corona crisis, consumers have increased their online shopping and certain eCommerce branches have seen unprecedented demand. Amazon has long been said to be one of the biggest profiteers of the pandemic. The eCommerce giant did not only have to prioritize products and extend delivery times in order to cope with the surge in demand, the company also hired tens of thousands of new workers along the entire logistics chain to process and fulfil all the orders. Following Amazon’s several announcements about the positive corona developments within the company made analysts estimate a year-on-year growth of 22% – 24%  for the first quarter of 2020, resulting in revenues of over US$73 billion. This translates into sales of US$10,000 per second, according to a calculation by The Guardian.
Last week, Amazon released their long-awaited official Q1 figures for 2020, and proved the estimates partly right. Net sales even exceeded expectations, but Amazon wasn’t able to reach the estimated earnings goal.

Amazon Q1 sales exceed estimatesCompared to Q1 2019, Amazon’s net sales in the first quarter of 2020 were up 26%, amounting to US$ 75.5 billion. The rise in demand, however, also came at a great cost. Almost 200,000 additional workers, increased safety and health measures and changes in logistics chains in the wake of the corona crisis resulted in high expenses. Amazon’s Q1 net income finally amounted to no more than US$2.5 billion, which is 29% less than in Q1 2019.

Along with the figures on Amazon’s Q1 earnings, CEO Jeff Bezos also announced that the company plans to invest all earnings expected for Q2 2020 – around US$4 billion – into measures in response to the COVID-19 pandemic, including health and safety equipment, changes in logistic patterns to better meet distancing criteria, pay raises for hourly workers, and COVID-19 testing for the staff. With these expenses in mind, Amazon forecasts Q2 operating income to drop to a low between –US$1.5 billion and US$1.5 billion, although another remarkable rise in net sales to a total of US$75 billion to US$81 billion is expected. As a result, net income might plummet. Bezos appeals to shareowners to embrace the idea and think in the long term.

 

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May 2020