Faced with a pandemic that appears to be receding and the highest levels of inflation in four decades, Amazon on Thursday posted its slowest quarterly growth in years and its first quarterly loss since 2015.
The company posted revenue of $116.4 billion in the first three months of the year, up 7% from a year earlier. That was down from 44% growth in the first quarter of 2021. The number of products Amazon sold in the quarter was flat from a year ago, and its costs of selling those items have also increased.
Amazon lost $3.8 billion in the quarter, including a $7.6 billion decline in the value of its investment in Rivian Automotive, an electric truck maker whose shares have fallen this year. The losses also came from Amazon’s consumer businesses in North America and internationally, although its cloud services division continued to grow and earn money.
The results were well below Wall Street expectations, sending Amazon’s stock price down more than 10% in after-hours trading.
“Our teams are fully focused on improving productivity and profitability across our fulfillment network,” Andy Jassy, the company’s chief executive, said in a statement. “We know how to do this and we have done it before. This may take some time, especially as we deal with inflationary and supply chain pressures. »
The company’s forecast for the current quarter of a 3-7% increase in sales indicates that its growth may continue to slow. Amazon said Prime Day, its annual deals event, held in June last year, would move to the third quarter of this year, further curtailing sales growth in the current quarter.
Amazon took advantage of the coronavirus pandemic as people flocked to online shopping. But as vaccines became more widespread and inflation hit 8.5% in March, attitudes changed again. According to Commerce Department data released Thursday, consumer spending on the types of non-durable products people often buy on Amazon fell 0.6% in the first quarter from the last three months of 2021, after adjusting for inflation.
Brian Olsavsky, the chief financial officer, said in a call with reporters that the company was “very happy” with how often customers were shopping on Amazon and that some of the slowdown reflected the end of buying habits. pandemic purchase. Customers made more frequent, low-cost purchases like masks a year ago, and now they’re returning to regular shopping habits, he said.
Amazon also struggled with rising costs, with operating expenses for its consumer business in North America rising 16% even as sales in the region rose just 8% in the past month. trimester. Inflationary spending added $2 billion in costs, Mr. Olsavsky said, adding that “we expect them to be there for a while.”
Additional costs of $4 billion were due to inefficient operation, he said. Amazon has spent heavily on hiring and doubling the size of its warehousing infrastructure over the past two years, including opening delivery depots across the country that allow its network of contractors to quickly bring packages to people’s doors.
Mr. Olsavsky said the company is pulling back some of its expansion plans to more efficiently maximize the spaces it currently has.
“We have too much space right now relative to our demand patterns,” he said. Without the unpredictable surges in demand driven by the virus, he said, “we can build our capacity.”
At one point in mid-March, Amazon forced employees at several warehouses to take unpaid leave because customer demand was low.
In response to 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 additional ‘fuel and inflation’ fees for sellers which it stores and delivers inventory to customers.
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 has faced an upsurge in union activism. In April, workers at a Staten Island warehouse voted to be the first Amazon factory in North America to unionize.
Amazon also had positives in its business. Amazon Web Services, its cloud computing business, grew 37% in the quarter to $18.4 billion in sales.